Sun. Aug 14th, 2022
Bullish Pivot Pattern

Bitcoin’s coins price action over the past three trading days has been exceedingly bearish. December 23rd saw a -2.69% drop for Bitcoin, December 24th a -0.76% drop, and December 25th a -0.87% drop. Today (December 26th), however, Bitcoin has made a dramatic move higher, registering a gain of nearly +2.5% and surpassing the closes of both December 25th, and December 24th. The chart above is Bitcoin’s daily chart. If we close today’s candlestick above yesterday’s close, then we will have formed an important candlestick pattern known as a bullish pivot. The bullish pivot is a three-bar candlestick where the middle candlestick has a lower high and a lower low to the candlesticks on its left and right. The bullish pivot candlestick often appears as a bullish continuation pattern – think of a pullback. But there need to be other factors that would support higher prices.

VPOC and Kijun-Sen

If the bullish pivot pattern indicates higher prices, then there should be other factors that would help determine the chances of an uptrend. There are two levels here that support the probable trade direction of a bullish pivot. First, we can see that for the past three days, and we’ve seen Bitcoin wick/bounce off of the Kijun-Sen. Second, the current VPOC (Volume Point Of Control) is a shared value area of the Kijun-Sen. The combination of the VPOC and Kijun-Sen creates a powerful price and volume support level, a kind of two-dimensional view of support. If the daily close is greater than December 25th and December 24th, then we will certainly get the confirmation of the bullish pivot pattern. The next trick is to identify where price will be halted on any move higher.

Fibonacci Extension

On the daily chart, two resistance zones can be identified within the Ichimoku Kinko Hyo system: the bottom of the Cloud at Senkou Span A (1) and the top of the Cloud at Senkou Span B (2). I don’t believe that these levels will hold as major resistance. Most certainly, we will see some initial resistance at these levels, but I prefer to project a future resistance zone with a Fibonacci extension. The number 3 on the chart represents the 1.618 Fibonacci extension. The Fibonacci extension is drawn by identifying a swing low, then a swing high and then a higher swing low. The swings for this current chart are the major swing low of 6430 on December 18th, the swing high of 7688.99 on December 23rd, and the higher low on December 25th. The 1.618 Fibonacci extension at 9152.55 is where I am projecting Bitcoin to reach as the next resistance level. This is an interesting level because it coincides with another important level that I’ve discussed: the top of the weekly Ichimoku Cloud.

Weekly Ichimoku Chart

The above chart is Bitcoin’s weekly Ichimoku chart. I’ve identified two extremely important price levels. First, is the bottom of the Cloud (Senkou Span B) at 8493.04. Second, the top of the Cloud (Senkou Span A) at 9072.89. Senkou Span A is a shared value area of the daily chart’s Fibonacci extension of 9252.56. The weekly chart’s Senkou Span A helps confirm the future resistance level as described in the above paragraph. I am continuing to remain vigilant with the current price action and will re-enter on any dip that does not break below last week’s low.