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May 24, 2018, 10:13:04 PM |
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Price experiencing selling relief from the support level at $7.5-7.4k, strong support remains below if needed.
Resistances
Yesterday's resistance levels still in place.
The $8.7-8.5k zone of resistance continues to hold as a wall above price, this is the first target for price to move over.
Above $8.7k creates a lot stronger of a bullish case with little resistance in the way until $9.1k.
Supports
Yesterday's support levels still in place.
At the moment we are sitting at an intermediate support created by April 3rd highs at $7.5-7.4k. Additional support at this level comes from the confluence of the weekly 50 MA.
Below $7.4k is a stronger level of support created by the .786 fib and previous horizontal price action at $7.2-7.0k
Moving Averages
Zooming out to get a better perspective on the larger picture, the weekly 50 MA is currently moving upwards towards price at the $7.5k level. We have yet to break below this level throughout the "bear market," and it has served as a good level of support in the past.
Ichimoku Cloud
Looking back at the 4H cloud we see that we have fallen quite far away from the cloud in terms of price. The cloud is an indicator created by a moving average algorithm, meaning price is far below the average. This won't last long, as a reversion to the mean in price is always an underlying force in the market. Also, notice how the local bottoms have occurred closer to the cloud as the downtrend has continued. That coupled with the slope of the down move being a lot less sharp than the previous two, gives us hope that we are near the bottom of this current move.
Oscillators
The 4H RSI has painted a slight bullish divergence which seems to be giving price some relief. The daily RSI is also in a zone that has been hugely responsive to down moves, providing strong bounces upwards from this level.
Conclusion
Bears seem to be losing strength at the moment as well as in the overall trend.
Price is nearing a relatively important level that could potentially set up for a bottom, which would create a very bullish structure for the market, posting a higher low, solidifying the symmetrical triangle chart pattern we discussed yesterday, and creating an even more rounded bottom argument for accumulation.
Longs opened from $7.2-6.8k with a stop loss right beneath will be set up for a solid risk:reward play. A break below those levels will be very detrimental to the trend, especially if we break below the recent local low at $6.4k, setting up a situation where long term buys to scale in at $5k would be wise.
Twitter: @BoomerCapital
Web: boomerangcapital.org
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