Get up to date on the latest analysis and trading tips with our Crypto update week 47
- Did the Bitcoin Spring-Wyckoff Phase just occur?
- Curve DAO Token Prints Double RSI Bullish Divergence
- Does the Size of a Crypto Candle Wick Matter?
Did the Bitcoin Spring-Wyckoff Phase just occur?
Bitcoin (BTC) may just be experiencing the popular Wyckoff accumulation pattern that calls the FTX-driven crash a mere bear trap before the market starts a bull run. The price action reflected in the trading range since mid-June resembles the Wyckoff accumulation pattern, which is usually followed by the mark-up phase.
Bitcoin Wyckoff Accumulation Phase
The selling climax (SC) in June 2022 marked the stopping of the prior downtrend. The subsequent automatic rally (AR) that followed and the successful secondary test (ST) completed phase A. Bitcoin then entered for about 3 months into a tight trading range between $25,000 and $18,000 in phase B.
In the short-term, Bitcoin is in the so-called Spring or shakeout phase, where the BTC price breaks below the low established during phase A. This bear trap usually sets the stage for the next rally.
If the market proves that the Spring phase is currently unfolding, we can expect an upward move next to solidify the swing low in phase C.
In the next phase (phase D), the Bitcoin price should move at least to the top of the previous trading range. This means BTC should retest the $25,000 resistance level. Lastly, phase E starts the mark-up phase, where demand is in full control of the market.
Curve DAO Token Prints Double RSI Bullish Divergence
Curve DAO Token (CRV) appears to form a double RSI bullish divergence on the daily chart. The bullish divergence is a sign that the bearish momentum is fading off, clearing the way for possible reversal.
RSI Bullish Divergence
CRV’s daily RSI is showing a strong bullish divergence against the short-term price and the long-term price action. In the short term, if we look at the technical picture, it’s clear that while the price made lower lows, the RSI made a higher low which led to the formation of a bullish divergence.
The technical picture becomes more interesting if we compare the current swing low of $0.40 and the mid-June low with the equivalent lows in the RSI reading there is again a strong bullish divergence. CRV’s price again made a lower low, but the RSI did not as it held above the mid-June RSI reading.
These two signals aligning together increase the probability of a reversal. The cryptocurrency may be in the process of putting a potential bottom in place or at least put a pause on the downtrend.
Looking forward: The first resistance comes around the $0.85 level but only a daily break and close above the $1.00 significant psychological level can mark a more considerable shift in the market sentiment.
Does the Size of a Crypto Candle Wick Matter?
In technical analysis, the candlestick wick highlights the highest or lowest price a cryptocurrency has traded during a particular period. Candlestick wicks are important because they help traders better understand the market sentiment and momentum.
However, the wick themselves come in different shapes and sizes. When the wick of a candlestick is longer, it carries more weight in the market activity than smaller wicks. So, the bigger the wick relative to the others, the better.
What Are Crypto Candles?
A candlestick chart’s main advantage is that it packs a lot of information in its design. So let’s go through its anatomy.
Body: the body gives you where a price “opened” and “closed.” The opening price happens at the beginning of the specific period, and the closing price happens at the end.
Wick: denoted by the thin lines of each candle, the wick represents how much the price has fluctuated. The top of the wick, called the upper shadow, represents the high of that specific period, and the bottom of the wick, called the lower shadow, represents the low.
Color: individual candles can be green or red. Green indicates a positive change in price (price closes above the opening price), and red indicates a negative change (price closes below the opening price).
Why Are the Crypto Candle Wicks Important?
The candlestick wick is crucial because it reveals a change in the market sentiment or a shift in the supply and demand equation. Whatever the catalyst that caused the shift in the market sentiment, the wick is a visual representation of what happened behind the curtain.
Wicks that develop after a one-sided price move either up or down signal that the market may reach a top/bottom. While a single wick may not be sufficiently effective for a trading setup, if multiple candlesticks with long wicks overlap, it’s more likely to see a change in the market sentiment.
In this case, a bottom is easy to identify. You can mark it as a price zone on your chart where multiple overlapping wicks show rejections or unwillingness for the price to move lower.
Bottom line: Candlestick wicks should not be ignored as they can play an essential role in identifying the bottom of a bear market.
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Does the Size of a Crypto Candle Wick Matter? | And More in This Weeks Crypto Update. was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.
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