Crypto trading can be a rollercoaster ride, with volatile market movements, sudden price fluctuations, and unexpected news events. While #technicalanalysis and market research are crucial components of successful crypto trading, another important aspect that is often overlooked is the role of emotions in trading decisions. Emotions like fear, greed, and FOMO (fear of missing out) can lead to impulsive decisions that can result in losses. In this article, we will explore how emotions can affect crypto trading and offer tips on how to manage them.

Fear and Panic Selling

Fear is one of the most common emotions that can impact crypto trading. When prices are falling rapidly, it can be tempting to panic sell in order to avoid further losses. However, this knee-jerk reaction can lead to selling assets at a low price and missing out on potential gains in the future. One way to manage fear in crypto trading is to have a clear strategy and stick to it. This can involve setting stop-loss orders or taking a break from trading during volatile periods.

Greed and Overtrading

Greed is another emotion that can affect crypto trading. When prices are rising rapidly, it can be tempting to jump on the bandwagon and invest more than originally planned. However, this can lead to overtrading, which increases the risk of losses. It is important to set realistic goals and limit the amount of capital allocated to each trade. Additionally, taking profits periodically can help manage the temptation to hold on to assets for too long.

FOMO and Impulsive Buying

Fomo or fear of missing out, is a common emotion in the crypto market. When prices are rising rapidly, it can be tempting to jump in and buy assets without a clear strategy. However, this can lead to impulsive buying and overpaying for assets that may not have long-term value. One way to manage FOMO is to conduct research and analysis before making a purchase. It is important to understand the fundamentals of an asset and assess its long-term potential before investing.

Conclusion

Crypto trading can be a highly emotional experience, and it is important to manage emotions in order to make rational trading decisions. Fear, greed, and FOMO can lead to impulsive decisions that can result in losses. To manage emotions in crypto trading, it is important to have a clear strategy, set realistic goals, and conduct research before making trading decisions. By managing  traders can improve their chances of success in the volatile and unpredictable crypto market.

#buildtogether #LearnCrypto #Binance #crypto2023

The cup and handle indicator is a technical pattern found on crypto price charts. It indicates the correction of a previous uptrend and eventually signals its resumption. The pattern exhibits clearly defined entry and risk levels but can be difficult to interpret in crypto markets due to fragmented volume metrics.

This trading guide explains the importance of the patterns and how you can formulate a strategic trading style to make the best out of it. We’ll be discussing the ins and outs of the indicator and to help you understand some of the limitations. 

What Is a Cup and Handle Pattern?

A cup and handle pattern is a consolidation chart pattern signaling bullish in which prices correct a portion of a previous uptrend, then rebound back toward the previous high, forming the “cup.” Prices then trade sideways, creating the “handle” which, when completed, signals a breakout to new highs.

The pattern was popularized by William O’Neil in his 1988 book, How to Make Money in Stocks. I learned to trade stocks 20 years ago using his methods, including the cup and handle pattern. This pattern is found a lot in the stock market and is beginning to appear frequently within the crypto market.

The cup and handle pattern can be found within a variety of time frames, from hourly, weekly to monthly charts. However, it is more powerful on daily chart time frames. There are a couple of variations of the pattern, but they all have a similar look.

Characteristics of the Cup and Handle Pattern

The cup and handle pattern appears after a big rally where the market needs to pause and catch its breath. The pattern consists of five key components, which then lead to a breakout higher.

The first four components help shape the structure for the pattern’s name because they form the outline of a cup with a handle.

Trading Heights

Strong uptrend to set up the potential pattern

Retracement of the previous rally

Rebound rally back up near the previous high

Drift sideways in pricing with a slant to the downside

5. Volume needs to increase on the rally of #3, but drift lower in #4 (more on this later)

After a big uptrend in price (#1), the market begins to correct lower (#2), shaping the first half of the cup. The dip in #2 generally retraces about 30–50% of the length of the previous uptrend. However, there are instances where a deeper correction may take hold. Once a bottom is formed, prices will begin to rally (#3). This rally pauses within 10% of the previous high. At this point, the cup portion of the pattern has been created. 

Now that prices are near their old high, bullish traders stop buying and wait to see if a breakout takes place. Traders who bought near the old high are thankful and nervous at the same time. They are thankful that prices have rebounded back to the old high, but nervous about another selloff. They are considered weak hands. Hence, selling the asset gradually, creating the handle (#4). 

However, the total volume begins to decrease as the market is running out of sellers. The price trend is from sideways to slightly lower, and it carves the handle of the pattern.

In the end, the pattern takes the shape of a coffee cup with a handle on the right side.

The pattern is confirmed when prices break above the high of the handle as the previous uptrend continues.

The cup and handle pattern cannot exist without a prior uptrend. As a result, the pattern is found frequently within the crypto market.

Types of Patterns

There are a couple of variations to this pattern that crypto traders need to be aware of. First, there are times when the handle portion of the pattern develops above the old high. This is considered the “high handle.” Secondly, since the market is fractal, these patterns will form on a variety of charting time frames, including intraday charts.

Cup and High Handle

One of the characteristics of the cup and handle pattern is that the handle must form within 10% of the old high. There are times when the market is extremely bullish and the handle pushes slightly above the old high but remains within 10% of it. These situations are considered to have a high handle.

Trading Heights

In the above example, we see a cup with a high handle. The handle forms above the old high, rather than below. The result of the pattern remains the same where it is a minor breakout higher, but then prices trade sideways on declining volume to form the handle. The pattern is confirmed when the market breaks above the highest price of the handle.

Intraday Cup and Handle

When William O’Neil first identified the cup and handle pattern, the focus was on daily chart time frames. Now that charting software has made access to intraday charts easier, variations of this pattern have emerged such that it can be found within intraday chart time frames.

Trading Heights

The intraday pattern operates similarly but concludes more quickly. In the Bitcoin example above, we are using a 4-hour chart. All of the necessary ingredients are present, including the volume spikes. During the retracement portion, you want to see increasing down in volume. On the rally portion of the cup, you want to see increasing volume. Then, during the formation of the handle, trading volume will ideally shrink as both buyers and sellers are shaken out.

The Bitcoin chart above also illustrates a high handle, which we discussed in the previous section. After the successful cup and handle portion of the chart, Bitcoin breaks out and accelerates higher.

Inverted Cup and Handle Pattern

The inverted cup is the reversal pattern indicating a momentum sell short signal signaling a bearish continuation pattern. The chart patterns happen within a span of three to six months and volume plays a role in the completion of the pattern and the confirmation of the breakout from an uptrend. At the same time, the inverted cup top is formed when there are more sellers bidding for the price to go down. When it happens, it indicates the end of the bull markets.

The inverted handle pattern forms when the asset emerges out and begins to fall from the right side of an inverted cup. However, a true inverted handle happens when it fails to break down and finally meets the support level and attempts to break to a newer low.

To spot a true inverted cup and handle pattern, the shape needs to be obvious and the trend line needs to curve up and then down like an upside-down cup. When this reversal pattern happens, it tells you that it is not a good probability to trade if pullback or correction is not on the way.

How To Identify the Cup and Handle Pattern

The cup and handle pattern starts with an uptrend, followed by a 30–50% correction. Use the Fibonacci retracement tool to measure out the previous uptrend, then look for the correction to retrace near the 30–50% zone.

Trading Heights

After the market has retracted into the 30–50% zone, look for a rally to begin pressing prices back toward the old high.

Trading Heights

As prices approach the old high, a failed breakout traps both recent buyers and buyers at the bottom of the base. Recent buyers see their small floating gain evaporate, and buyers at the bottom of the base fear a double top reversal.

Both sets of buyers exit the market; as a result of this entrapment, these buyers are nervous and slowly sell out, creating the handle of the pattern.

Tradung Heights

The handle must form in less time than it takes to form the cup. On most occasions, the handle will form in about 1/5 to 1/3 of the time required to form the cup. 

Additionally, the handle needs to stay in the upper half of the cup and not drop into the lower half of the cup’s price range. For example, if the cup forms between a price range of $1.0 to $2.0, then the handle needs to form within $1.50 to $2.0. If the handle pushes too low, then it will be ineffective at trapping short sellers.

An effective handle will drift lower, rather than trend lower. This sows doubt among short-sellers, who become nervous about the failed trend to the downside. As a result, they close out their positions, which adds a little buying pressure to the market, popping the price a little.

Then, new buyers enter the market as they see the technical setup complete, pushing the market above prior highs. This adds even more strength to the bullish trend.

How To Use the Cup and Handle Pattern

The cup and handle pattern is an effective combination to flush out weak holders. 

To trade the cup and handle pattern, wait for technical levels of resistance to break. There are two areas where traders can buy the resistance break. 

Trading Heights

First, draw a resistance trend line encompassing the high prices of the handle. A break at the resistance trend line is your signal to buy. The second opportunity to buy is a break above the high of the handle. Waiting for a break above the handle’s high is a more conservative approach, as you are seeking confirmation from the market that the price is hitting new highs.

The risk and stop loss on the trade will be set at the low of the handle. This way, if the breakout fails and falls back below the handle’s low, then you can close out the trade at a small loss and move on to the next opportunity.

If the breakout is successful, then you can consider moving your stop loss to the breakeven level, locking in the trade without experiencing a loss.

The target for the cup and handle pattern is fairly simple. Measure the distance from the cup high to the cup low and project that same distance beginning at the handle’s low point. So long as the handle remains in the upper half of the cup, this level of price projection leads to an attractive risk-to-reward ratio on the trade.

Case Examples

Here is an example of the cup and handle pattern in a Bitcoin chart from 2019. 

After rallying 25%, the market corrected lower approximately 50% on increasing bearish volume. Then, the market rallied to come within 3% of the previous high.

At that point, the cup of the pattern was completed and the handle was about to begin. The handle drifted lower on decreasing trading volume. The pricing of the handle remained within the upper portion of the cup, so all of the necessary ingredients were present for a bullish breakout.

Once the handle was finished, Bitcoin rallied higher on increasing volume, which led to new highs.

Below is another chart, a cup and handle example for Ethereum.

After rallying 300% to begin 2021, Ethereum began consolidating the uptrend to form the cup. The cup was relatively shallow, at nearly 30% of the previous uptrend. After correcting, the price rallied back to near the old high to finalize the cup.

As the handle began to develop, its slight downward slope, coupled with decreasing trading volume, was a big clue that this may be a minor consolidation. This was a relatively long handle, but once it had finished, Ethereum rallied on increasing volume.

Indicators To Identify the Cup and Handle Pattern

Aside from having a clearly defined pattern with specific entry and exit parameters, this chart pattern is a favorite among traders because it is simple to identify. There aren’t a lot of fancy indicators or technical tools needed to spot the pattern.

There are only four technical indicators needed to help you identify the pattern:

Support and resistance

Trading volume

Moving average on the trading volume

Trend lines

As you know by now, the pattern consists of two parts, the cup plus the handle. The pattern cannot be anticipated until nearly all of the cup is completed and the price is near the old high.

As a result, the trader will need to highlight the old high with a horizontal resistance line. Additionally, as the right side of the cup is created, we need to observe several bullish candles on rising trade volume. An easy way to figure this out is to place a 50-period moving average on top of the volume. 

This moving average indicates the average volume for the last 50 periods. You want to see several bullish candles with volume above the 50-period moving average, while most of the bearish candles remain below the moving average. If a large bullish and bearish volume candle are next to each other, you want to see the bullish candle display a higher volume than the bearish candle.

Once the cup is completed, the handle will begin to develop. The handle will be marked by sloping trend lines. These trend lines should have a slight downward slant to them. The important trend line is the resistance trend line, which is the top line. If prices break above resistance on rising volume, then the market will likely continue its trend higher.

Limitations of the Cup and Handle Pattern

Like any form of pattern and technical analysis, there are times when this predictor works well and other times when the forecast does not work out. There are situations when the reliability of the cup and handle pattern is diminished.

Check the Broad Market Trend 

The cup and handle pattern is the result of a bullish breakout. When the broad market is in a bullish trend, that makes the breakout a higher probability move. However, if the broad market is in a bearish trend, then a bullish breakout is less likely to occur. 

Bitcoin and Ethereum are the two largest cryptocurrencies, commanding approximately 60% of crypto’s total market capitalization. If both Bitcoin and Ethereum are in an uptrend, then the chance of a bullish breakout is higher. If both Bitcoin and Ethereum are in a downtrend, then a bullish breakout has a smaller chance of occurring.

Apply the Cup and Handle Pattern to Large and Growing Cryptocurrencies

A major limitation to the cup and handle pattern is evidenced when applying it to small cryptocurrencies that do not have a large following. The cup and handle pattern works best with cryptocurrencies that are growing their following. The more buying and selling interest that exists, the better the gauge of the pull between buyers and sellers. 

Overall Volume Makes a Difference but It May Be Difficult to Obtain

The trading volume of a crypto asset makes a difference in determining a cup and handle pattern. However, crypto trading takes place on many different exchanges — and even off the exchange. Therefore, arriving at an accurate volume figure is extremely difficult.

The Bottom Line

The cup and handle pattern has been around for over 30 years and is widely followed by many technical traders. Though limitations of the pattern are not to be ignored, the strong trends in crypto help make the cup and handle pattern effective in trading crypto markets.

#crypto2023 #buildtogether #technicalanalysis #educational #Binance

Divergence is a type of pattern found on crypto price charts that signals an upcoming shift in trend. Classic or regular divergence is found at the end of a trend, while hidden divergence is found at the end of a trend consolidation.

Both types of divergence appear frequently on crypto charts. Alert traders who spot them are able to see good investment opportunities.

What Is Divergence?

Divergence is a technical analysis pattern spotted on price charts when the price of a crypto asset is moving in the opposite direction of a technical indicator or moving contrary to other data. Divergence is a warning that the current trend is weakening and may change.

Divergence signals that a positive or negative price move may soon happen. Positive (bullish) divergence signals that prices may soon rally. Negative (bearish) divergence signals that prices may dip soon.

When positive divergence is spotted on trading charts, crypto traders who are currently short the asset will plan to exit and close their positions. Crypto traders who are flat or long the asset will prepare to position long or add to their long position since positive divergence signals a rally may soon begin. 

There are two types of divergence that can signal a bullish rally may soon begin. Regular or classic divergence is the most common type. Hidden divergence is a little more difficult to spot but can be a powerful pattern, signaling a shifting trend.

What Is Regular or Classic Divergence?

Regular divergence occurs when the price of a cryptocurrency continues higher and creates higher highs, but the indicator creates lower highs.

In the image above, Bitcoin continues to create new all-time highs in price. However, the Relative Strength Index (RSI) indicator is creating a series of lower highs. This is a bearish symptom of market momentum and suggests a trend change from up to down is about to begin.

The same thing can also happen in the opposite direction.

In the example above, Bitcoin is experiencing a correction and keeps carving lower lows in price. However, the MACD indicator creates higher lows, signaling the downward momentum has weakened and a bullish rally about to begin. Bitcoin goes on to rally approximately 20% in a couple of weeks.

What Is Hidden Divergence?

Hidden divergence is created when the price of a cryptocurrency carves a higher low, while the indicator creates a lower low. Typically a hidden divergence can also be categorized by a bullish or bearish hidden divergence.

For example, a bullish hidden divergence happens during a correction of an uptrend when the value of an asset makes a higher low. However, the oscillator is still showing a lower low. This usually translates that the bullish trend continuation signals trader to take profit.

Bearish hidden divergence, on the other hand, is the opposite. Meaning the value of an asset makes a lower high, but oscillators are showing a higher high. This signals a trend reversal in which a trader should stop loss and sell-off as soon as possible.

In the image above, Ethereum is consolidating and begins to grind sideways, creating a higher low in price. At the same time, the stochastic indicator points to a lower low. This is a bullish hidden divergence. It signals a rally is about to begin. Sure enough, Ethereum rallies nearly 90% over the next couple of weeks.

Hidden divergence can also signal a deeper correction.

After a feeble recovery from a May 2021 correction, Ethereum carves a hidden bearish divergence pattern. Ethereum displays a lower high on price, while the MACD indicator shows a higher high. This signals that a continuation of the downtrend may begin soon. Shortly thereafter, Ethereum fell 35% further.

When to Use Regular or Hidden Divergence

The difference between regular and hidden divergence is subtle. 

Regular divergence is typically found at the end of a long trend and signals a new corrective phase. Hidden divergence is typically found at the end of a consolidation phase and signals that the consolidation is about to end in favor of the original trend’s direction.

A regular divergence is used at the end of a long trend, while hidden divergence is used at the end of consolidation.

How Is Hidden Divergence Different?

Hidden divergence is different from regular divergence due to the location of the pattern. Hidden divergence tends to occur within an existing trend. It signals the end of a consolidation phase within the larger trend. We call it “hidden” because it isn’t obvious to the untrained eye.

 Above, we can see a strong uptrend within Bitcoin’s price. There are two instances of bullish hidden divergence in the middle of this uptrend. The first appears on February 4, 2021. The RSI indicator creates a lower low, while Bitcoin’s price creates a higher low. This signals the end of the small consolidation as Bitcoin rallies higher.

Then, between February 10 and February 14, another consolidation occurs. Again, RSI is forming a lower low, while Bitcoin’s price creates a higher low. This hidden divergence signals the end of that small correction and Bitcoin rallies further.

As the trend is tiring, regular bearish divergence appears, signaling that the trend may soon turn lower. Beginning February 19 to–21, Bitcoin’s price carves a series of higher highs. However, RSI is pointing lower highs at the same time, suggesting the momentum is very weak and a reversal is imminent. Bitcoin subsequently corrects 25% lower.

Hidden divergence will appear in both bullish and bearish directions. The examples above using Bitcoin are great illustrations of bullish hidden divergence.

An informed trader can also use hidden bearish divergence to help them identify when a continuation of the trend may continue lower. This is helpful when the crypto markets are experiencing a correction, though the average trader is uncertain if the correction will dig deeper.

Above, as Bitcoin is correcting lower in the latter part of March 2021, bearish hidden divergence appears. On the chart, you can see a higher high by using RSI, while we have a lower high on Bitcoin’s price during the same period. This is a clue that more losses are on the horizon. Shortly thereafter, Bitcoin’s price fell about 12% in two days.

How to Spot Hidden Divergence

Spotting hidden divergence can be tricky to the untrained eye. However, with some practice, you will be able to spot and trade the divergence in your favor. Hidden and regular divergence can be spotted on all crypto chart time frames, so you can find plenty of opportunities to practice spotting it on crypto charts.

One important ingredient for seeing divergence is using a technical indicator. Most oscillators (indicators) will work. But keep in mind that adding more oscillators to the chart does not equate to a more reliable signal. Choose the oscillator or charting tool that you’re most comfortable with. Regardless of the indicator chosen, that same indicator can help you identify both regular and hidden divergence.

In several examples above, we used RSI. In the following examples, we’ll illustrate using stochastics and MACD, which are two other common tools used to spot divergences.

Hidden Divergence Using MACD

Let’s start with the MACD indicator, which if you recall has three parts: 

MACD line

MACD signal line

Histogram

When using the MACD to identify divergences, you can utilize any of these three parts. You don’t need all of them to spot the divergence. For these illustrations, we’ll focus on the MACD line. I recommend thickening the MACD line on your chart so that it’s easier to see.

Next, determine the direction of the trend. If the trend is up, then we’ll look for bullish hidden divergence, which means the MACD line will print a lower low while the price prints a higher low. If the trend is down, then look for bearish hidden divergence, where the MACD line prints a higher high, but the price prints a lower high.

Here’s an example of a 1-hour price chart from March 2021. After bottoming on March 25, Bitcoin began to rally. Consolidation occurs between March 27–28. On March 28, the MACD line is printing lower lows compared to the March 27 value — and yet, Bitcoin’s price is higher. This is a setup for another rally. Once the consolidation ends, Bitcoin rallies about 9% over the next two days.

Spotting Hidden Divergence Using Stochastics

The stochastic oscillator (some charting packages call it slow stochastic) is a three-input oscillator that prints two lines. I usually use the input value of 15-5-5, but 14-3-3 is also useful.

Thicken the %K line so it’s easier to see on the charts.

Above, we can see Ethererum locked into a downtrend on a 1-hour chart in June 2021. From June 15–7, a hidden bearish divergence is spotted as the stochastic oscillator prints a higher high, while Ethereum carves a lower high.

This pattern suggests the consolidation of the previous downtrend is over, and that Ethereum may continue to fall. With the benefit of hindsight, we can see that the price correction in Ethereum accelerated lower as the cryptocurrency lost about 20% over the next two days.

Applying Hidden Divergence to Crypto Technical Analysis

Learning to spot hidden divergence patterns doesn’t have to be difficult — especially when you consider the frequency with which hidden divergence appears on crypto charts. Now that you’ve spotted the pattern, what do you do next?

Follow this step-by-step guide on setting up the trade.

Step 1: Filter Your Trades

Hidden divergence is a pattern that signals the end of price consolidation. With Bitcoin, it will signal a continuation of the previous trend. To get the most out of your trade, look for the hidden divergence pattern within the context of the larger trend.

For example, if the larger trend is up, then look for bullish hidden divergence. When you spot the bullish hidden divergence pattern, use it as a buy signal. Ignore bearish hidden divergence patterns in an uptrend.

Do the opposite in a downtrend: look for bearish hidden divergence, and ignore the bullish patterns. Once you see the bearish hidden divergence pattern, then look to sell.

You’ll receive a more reliable signal when the hidden divergence pattern is aligned with the direction of the larger trend.

Step 2: Place Your Stop Loss

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After you’ve spotted a hidden divergence trade that aligns with the larger trend, it’s time to plan out the trade’s parameters. Divergence patterns are great for signaling an upcoming trend change, but they can be less reliable when it comes to the timing of the trend change. Therefore, it’s important to give your trade room to breathe. You don’t want the normal movements of the market to stop out your trade.

After you spot the hidden divergence, place the stop loss just beyond the recent swing price extreme. In the case of bullish hidden divergence, place the stop loss just below the swing low where the buy signal shows up. In the case of bearish hidden divergence, place the stop loss just above the swing high where the sell signal occurred.

Step 3: Establish Your Target

As you know, crypto markets can trend at mind-blowing rates. Traders with dreams of endless profits will look to crypto and place open-ended trades with no exit plan. However, I would encourage you to think differently.

If you’re trading on shorter-term charts, i.e., 1-hour or 2-hour, consider a target where you can remove part or all of your trade. A good rule of thumb is to target at least twice the distance to your stop loss. So, if your stop-loss is 100 ETH, then target at least 200 ETH. If you’re fortunate and prices move in your favor, watch out for classic divergence that will signal a premature end to the trend.

Limitations of a Hidden Divergence

With a little practice, hidden divergence patterns can be found on a lot of crypto charts. However, there are a few limitations to be aware of.

First, divergence patterns are easy to spot in hindsight but potentially difficult to spot in real-time. This is because the emotional state of the market will get you excited about a bullish bump, only for you to find out later that this was a bearish hidden divergence setup. Try to keep your emotions out of the market. An emotional eye can bias your analysis.

Secondly, when hidden divergence appears late in a trend, risk-to-reward ratios aren’t as reliable. Most of the trend is over, and by the time you wait for the price to diverge from the oscillator, you’re entering into the trend at a worse price point.

Lastly, the price patterns for smaller cryptocurrencies may not be as reliable as the ones you’ll find with larger markets like Bitcoin and Ethereum. Fewer buyers and sellers are interested in a smaller market, leaving it more prone to volatility and bad tics.

Conclusion

Bullish and bearish hidden divergences are powerful patterns seen at the end of consolidation. They signal a continuation of the original trend. These patterns are frequently found within Bitcoin, Ethereum, and other crypto markets, making them easy to learn. 

However, spotting them in real-time can be challenging. Additionally, if hidden divergence is discovered late in the trend, the trade tends to be less rewarding. 

The key to success in trading hidden divergence is to filter your trades in the direction of the larger trend. Always analyze the market sentiment, and it is best a trend-following momentum indicator to confirm the signals.

#Binance #crypto2023 #technicalanalysis #educational #buildtogether

Bitcoin has confirmed a long-term bullish reversal pattern and broken out of a bearish pattern. The uptrend is expected to continue.

The Federal Reserve’s balance sheet continued to grow over the past week. As of March 22, it had increased by $393 billion since the banking crisis.

Weekly outlook

After hitting a low of $15.4k in June 2022, Bitcoin began to rise and formed the right shoulder of an inverse head and shoulders (H&S) pattern. This is a bullish pattern, often leading to a trend reversal to the upside.

Indeed, the price broke out of the pattern in the week from March 13 to 20, 2023 with a large bullish candle, marking the formation of a long-term bottom. This technical pattern has a target of $35k, calculated by connecting the high of the pattern to the breakout point.

After the breakout, price is faltering at the minor resistance area of 28.4k. However, with the pattern formed over more than 9 months, the post-breakout movement could be very strong. Therefore, the price is expected to break through the $28.4k resistance and move to the next resistance at $32k and beyond to the H&S target of $35k.

The RSI indicator supports this view by creating a higher high and being above 50.

BTC/USDT weekly chart. Source: TradingView

Ascending parallel channel

Bitcoin has been trading inside an ascending parallel channel since the beginning of January 2023. This is a bearish pattern, often leading to breakdowns in most cases.

However, after reconfirming the channel support line on March 10 (blue arrow), the Bitcoin price rose strongly and broke out of the pattern on March 17. This indicates that the upward move is impulsive.

The price is currently in the process of flipping the channel resistance line into support. If successful, the price will make another attempt to break above the $28.4k level.

A retracement back into the pattern could see Bitcoin drop to the strong support zone of $24k-$25k, formed by the horizontal support level, Fib 0.5, and the channel midline. Afterward, Bitcoin will make another breakout attempt.

BTC/USDT daily chart. Source: TradingView

Conclusion

The most likely outlook suggests that Bitcoin will continue to rise in the coming period.

The bullish view will be invalidated if Bitcoin breaks below the $24k-$25k level. If so, Bitcoin could drop to the support line of the pattern at $21.3k and breakdown thereafter.

#Bitcoin #BTC #technicalanalysis #dyor #azcoinnews

This article was republished from azcoinnews.com

The Moving Average Convergence Divergence (MACD) is a popular technical analysis indicator used to analyze financial markets, including the cryptocurrency market. The MACD is a versatile indicator that can help traders identify trends, momentum, and potential buying and selling opportunities. In this article, we will provide a short and exclusive guide on the MACD indicator.

What is MACD?

The MACD is a trend-following momentum indicator that is calculated by subtracting the 26-period Exponential Moving Average (EMA) from the 12-period EMA. A 9-period EMA, known as the signal line, is then plotted on top of the MACD line to act as a trigger for buy and sell signals. The MACD is displayed as a histogram, which oscillates above and below the zero line.

How to Use MACD

The MACD can be used in several ways to help traders identify trends, momentum, and potential buying and selling opportunities:

Identifying Trends

The MACD can be used to identify trends in the price of a cryptocurrency. When the MACD line is above the signal line, it indicates an uptrend, and when the MACD line is below the signal line, it indicates a downtrend.

Identifying Momentum

The MACD can also be used to identify changes in momentum. When the MACD line crosses above the signal line, it indicates a bullish momentum, and when the MACD line crosses below the signal line, it indicates a bearish momentum.

Divergence

Divergence occurs when the price of a cryptocurrency is moving in the opposite direction of the MACD. Bullish divergence occurs when the price of a cryptocurrency is making lower lows while the MACD is making higher lows. This can indicate a potential buying opportunity. Bearish divergence occurs when the price of a cryptocurrency is making higher highs while the MACD is making lower highs. This can indicate a potential selling opportunity.

Histogram

The histogram on the MACD chart represents the difference between the MACD line and the signal line. When the histogram is above the zero line, it indicates bullish momentum, and when the histogram is below the zero line, it indicates bearish momentum.

Conclusion

The MACD is a powerful tool in technical analysis that can help traders identify trends, momentum, and potential buying and selling opportunities. By understanding how to use the MACD, traders can make more informed trading decisions and increase their chances of success in the cryptocurrency markets. However, it's important to remember that no indicator is perfect, and traders should always use multiple indicators and analysis methods to make trading decisions.

#MACD #technicalanalysis #crypto #buildtogether