Above: Bitcoin (BTCUSD)
At the time of writing this article (1500 EST), Bitcoin is trading down -3.50% at $33,075. The current candlestick on the daily chart is a very nasty Bearish Engulfing candlestick. Now, there remains about five hours before the daily candlestick closes, but as long as Bitcoin remains below the $33,470 level, a bearish engulfing candlestick will print. If that candlestick pattern is ultimately the daily candlestick for the day, then there is one more piece of information I need to look at: volume. The current daily traded volume for Bitcoin is equal to Sunday’s (July 11th, 2021) and if it does move lower, we can expect volume to pick up. Within the Ichimoku system, Bitcoin has a full gamut of bearish conditions:
1.Price below the Tenkan-Sen and Kijun-Sen.
2.Price below the Cloud/Kumo.
3.Tenkan-Sen below the Kijun-Sen.
4.Tenkan-Sen and Kijun-Sen below the Cloud/Kumo.
5.Lagging/Chikou Span below the Cloud/Kumo.
6.Lagging/Chikou Span below the candlesticks.
7.Senkou Span A below Senkou Span B.
There is not a single piece of analysis within the Ichimoku system that yields anything resembling bullish conditions in the near future. To compliment the above Ichimoku conditions, there are other indicators and measure showing lower moves coming up.
1.Price below the 50% Fibonacci Retracement level of $33,773.04 (#1 on the chart).
2.Price below the VPOC (Volume Point of Control) of $34,771 (also at #1 on the chart).
3.Composite Index crossed and is now below its fast and slow moving averages (#3).
The proverbial nail in the coffin here will likely occur when the %B (#4) crosses below 0.2. Why? Because the RSI remains above 40. I don’t have any hard data or industry led research to back this up, but its been my experience that when Bitcoin trades sideways and then prints a %B reading that crosses below 0.2 while the RSI remains above 40, it usually represents a very big move south. I’ll share the criteria I need in order to speculate that Bitcoin will being a relatively fast move south:
1.Bitcoin must cross and close below an important price level – in this case, Bitcoin has crossed below the 50% Fibonacci Retracement and the VPOC.
2.The Composite Index is below its fast moving average – ideally its below both the fast and slow and shows a recent move below the averages.
3.The RSI is greater than 40.
4.The %B crosses and closes below 0.2.
Nearly all of the conditions I would need to see for confirmation that Bitcoin is about to have a mega drop are fulfilled – but I don’t want to be too confident. I recognize that while everything is screaming bearish – there is one level and one piece of Ichimoku data that could really change my level of certainty. That piece of Ichimoku data is the location of the Chikou Span. Everyday that we move closer to Saturday (July 16th, 2021), the threshold price level that Bitcoin would need to get to to move the Chikou Span above the candlesticks decreases. We could very easily see a massive bear trap form! But that is the most unlikely event given the current price action. Nonetheless, it is something to monitor.