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Hidden Bearish RSI Divergence

SPX weak move poised for a return to the VPVR Point of ControlIntroduction The recent uptrend in equities has been called a “hated rally” by several financial news organizations (www.afr.com) and lots of people are “sitting on their hands” for this uptrend. That type of behavior seems ripe for people to try and sell the local high and buy lower down. The monthly ADX has remained very low. When the ADX goes from below 20 to the middle zone it is a sign that the volatility and move may proceed in a more sustained manner and when the ADX is above 40 that is a technical sign that there will be a sustained uptrend. A move from above 40 to below 40 is a sign the move is running out of steam. Likewise, the Average True range has been falling during this uptrend. The ATR measures price volatility and this falling volatility combined with a increase in price is broadly bearish. The black arrow on the chart shows that just prior to SPX’s all time high the ATR was falling. The ATR falling again suggest a similar reversal and a new local low. The green arrow also shows some divergence on the ATR. The ATR is good for both regular and hidden divergences so the fact that SPX shows both is a stronger suggestion that this uptrend will reverse. One simple targeting stratify is to assume that price will pull back to the Point of Control at the VPVR. When using the Volume Profile Visible Range it is important to have a defendable starting point and I have set the screen to see the price action since the bottom of the 2008-2009 financial crisis. I find that to be a very defendable place to see the volume by price action. Recall, most volume charts show volume by session wile the VPVR shows volume by price over a specific date range. I have my VPVR defauls set to 68 so I get a close as possible to seeing 1 standard deviation of volume area and I set the number of rows to 147 simply because that gives me 100 rows in the value area. We can see from the main chart that there was a lot of resistance the Point of Control (price where most trading happened) there between 2014 and 2016 and the C19 dump retested that level. In uptrends price has a tendency to be above the value area and correct to it as support and in downtrends price is below the value area/point of control and tends to rally to it and then reverse. In the long run price returning to the Point of Control might set up a head and shoulders but that is a problem for a later time. The quarterly chart below shows that the price target of 2099 puts the price between the 2.0 and 2.618 Fib extension ratios. That is about the max target we could expect from a ABC correction based off a strong understanding of Elliot Wave theory. Elliot Wave Resource forex-indicators.net pg 45 Figure 4-8 Figure 4-9 In a regular flat correction, waves A, B and C are, of course, approximately equal, as shown in Figure 4-10. In an expanded flat correction, wave C is often 1.618 times the length of wave A. Sometimes wave C will terminate beyond the end of wave A by .618 times the length of wave A. Both of these tendencies are illustrated in Figure 4-11. In rare cases, wave C is 2.618 times the length of wave A. Wave B in an expanded flat is sometimes 1.236 or 1.382 times the length of wave A Conclusion I am going to remain on the sidelines of the equities market until I see some bullish divergence on indicators on the weekly or monthly time frames. I have a nagging assumption that as the equities markets top that the broader crypto market will have a last hurrah for 2-3 years and that will begin its drawdown.
SP:SPXShort
by This_Guhy
2
LTCUSD: MACD Hidden Bearish Divergence Targeting $45-$41LTC has recently formed some Hidden Bearish Divergences at these levels on the MACD and when looking at the Potential Harmonic Wave Structures it could get in if it goes down, many of them point towards $45 as that would be a second test of a much bigger Macro Log scale Gartley on the left, the PCZ of a current Potential Bullish Deep Gartley, and the PCZ of a Potential Bullish Butterfly. After hitting those downside targets we could then see Litecoin go for another big move up; this time actually breaking the range to the upside and going for bigger targets perhaps as high as over $9000 as seen in this macro chart here:
COINBASE:LTCUSDShort
by RizeSenpai
2
Bitcoin poised for a serious correctionIntroduction Bitcoin has shown a lot of strength since I called the end of the bear market mid January. That was somewhat of an audacious call but so far it has played out in my favor. Nothing goes straight up and it seems that the time for bitcoin to have its first major pull back is upon us. This is also my first post after being designated a “wizard” so I am caught between a couple of tensions. One is to keep on posting the quality of content that got me appointed (which is opaque to me). The other tension is to not be a try hard. Primer on Divergences Normal Divergence (Trend Reversal) Bearish: Higher highs on price action but lower highs on the indicator Bullish: Lower lows on price action but higher lows on the indicator Hidden (Trend Continuation) Bearish: Lower high on the price action and higher highs on the indicator Bullish: Higher low on the price action and a lower low on the indicator Indicators Dynamic Network Value to Transactions Ratio by aamonkey Bitcoin is the name of a payment network as well as the currency used on that network and the smallest division of that currency is the satoshi. This is compared to the dollar, which circulates around the world in the SWIFT system with the smallest division that most people use is the cent. The Network Value Transaction ratio represents the cryptocurrency’s network value (which is its current market capitalization) and the transaction volume that’s transmitted through Bitcoin’s blockchain over a period of 24 hours. In other words, how much is money moving around compared to cost of bitcoin. It is closely related to the idea of the velocity of money. All things being equal when the velocity of money picks up things get expensive. The indicator is simple to understand. When price is in the green the smart money looks to accumulate/absorb bitcoin and other cryptos and when the NVT moves to the red or even outside the red smart money looks to sell. This is time frame dependent. Right now we are quite hot on the 3 day time frame but no where near where I would be concerned on the weekly. This circumstance makes it very painful to hold leveraged longs but also difficult to go short because that is against the larger trend. In other words, it is very easy to lose money here. Average Directional Index D+ and D- The ADX quite simply tells you how strong a move is. It uses a true range calculation to measure a D+ that compares previous high to one another. When you have higher highs the D+ in green goes up. The True Range Calculation also compares lows and when the lows are lower the D- goes up in red. When the green line is above the red line the trend is bullish and the higher it is above the red line the more bullish things are. When the red line is above the green line price is trending down. When they cross it indicates neutrality, or in other words, price has moved sideways long enough that the positive and negative price action neutralized one another. It is possible for the D- and D+ to braid and cause a lot of damage to traders so the indicator is best used as part of a collection of indicators or to confirm a chart formation breakout. Here the D+ is showing hidden bearish divergence. The trend is exhausting and we can se the D- is poised to begin swinging upward. Relative Strength Index This is one of the fundamental indicators for most traders. It compares average gains to average losses and when the average gains are more than the average losses price goes up. When the RSI is falling but price is still going up it is a sign that reversal is near. Technical Analysis The divergences are pretty easy to see and I am confident that there is a great dip buying opportunity brewing. Where the low is going to be is hard to say. How long it will take is also very difficult to determine. To make it easy for me, I will look to buy again when the NVT is green again on the 3 day. Should help me stay patient. A 25% drop is very do able at this point. It would be price returning to a trendline that helped set up this uptrend. I hope to see some hidden bullish divergence when this bases out, which means I would want the RSI, MACD, etc, to be lower than then when this uptrend began. I don’t think the gaussain channel or the ketner will confine price action during this dip. This weakness in bitcoin puts a lot of other long trades at serious risk. It is very hard for other cryptos to stay strong If you are holding be prepared for the value to go down. If you are margined be prepared to have your stop strategy tested. Fundamental Analysis (technical analysis on the dollar) DXY looks like it has caught support on both the Gaussian and Keltner channels and has set a double bottom. This sets up some W targeting with a fib draw from the low to the high of the bridge of the W. That target is in a lot of as it is in the micro bull trap of the previous high and against the trend line that was previous support and most likely resistance when tested again. This fits my larger view on the dollar that it will have to retest its previous wedge resistance as support. This means something big is coming for the dollar and therefore the globe. I wonder what kind of dreadful evens will feed into the dollar decline. This zigzagging of the dollar is going to make dollar alternatives go crazy. My Realistic worst case scenario for BTC I have been operating under the assumption the low is in. If not, the easiest target to set is back to $10k. While I don’t expect it to happen it is the easiest way my analysis has been wrong and one I have to prepare for. Conclusion These are trying economic times. Trading discipline are going to be key as the dollar whipsaws around and people try to position themselves long, short and sideways. This is not the time to be opening trades without a good entry system and a good system to take profit and set stop losses.
INDEX:BTCUSDShort
by This_Guhy
15