BTC may be forming an Adam and Eve, but don't trust it yet!First let me lead this by saying that I am still a bitcoin bear. The trend is your friend, and the trend is down . Until we have confirmation of reversal, traders should be extremely wary of taking on long positions, especially with such low volume on most major exchanges.
With that out of the way, it's also important to begin paying attention to possible reversal signals. Looking at BTC we can see a fairly obvious "Adam and Eve" formation showing on the charts. For those unfamiliar, an Adam and Eve is a type of double-bottom where the second bottom is much flatter than the first. This formation generally means both sellers and buyers are much weaker than at the previous bottom, and a small amount of good news / positive sentiment can push prices up.
For confirmation we need to see a break of 12K. Of course, this is quite delayed, and as traders we want to enter much earlier.
The earliest possible confirmation would be a break of the long-term descending trendline. You may note that I haven't drawn this "perfectly" - trendlines should be treated more like trend areas. My trend "area" is drawn to be parallel with the lower supporting trend "area." Either way you draw your lines, this would occur around the $7,800-$8,000 price range, depending on the length of time in which these moves occur.
The next major price level would be $9,200, a level we have historically struggled with.
While $10K may be a significant psychological price level, I do not find it very significant from a chart perspective. I believe if we break $9,200 and hold above it, $10,000 would fall shortly thereafter.
lastly we have the major $12K level would would confirm the formation and bull market.
To reiterate, in no way shape or form am I expecting this A&E formation to play out. However, it is important as a trader to recognize its possibility and be prepared to respond accordingly. If price begins rising out of the "eve" bullishly we must reassess our bearish point-of-view. A trader who cannot change perspectives or recognize trend reversals is dead in the water.
Finally, you may have noticed I switched to bars over candles. I've recently begun preferring them for cryptocurrencies over candles due to the fact that the market never closes and bars remove a great deal of "chatter." I still prefer candles for stocks, due to gaps and the nature of stock market trading. Either way, price-action is price-action - use what you like!
