Technical Analysis - Constellation
DAG/BTC - 11/21/2019
As shown in the chart above, we will be analyzing the technical status of Constellation against Bitcoin.
We will be asking a series of questions to come to a reasonable conclusion:
What is the current market structure?
Currently, on the 1Daily timeframe, we can see a parabolic uptrend, respecting its parabolic support and retracing very reliably to this support. This kind of market structure is one of the most profitable and most exciting to trade. The retraces are called parabolic advances, and usually, there is a count of 5 until the move is exhausted and the parabolic uptrend breaks down violently. Currently, once can count three self-explanatory ones and argue about one more in August. This still gives enough space for at least one more impulse move upwards.
How likely is the continuation of this parabolic move?
Looking at the structure, as elaborated above it is quite expected to see at least one more impulse move upwards, catapulting DAGBTC to new highs.
Nevertheless, there are some signs to watch out.
The first one being, the liquidity, and volume of this pair. While analyzing the Volume indicator, one can see significant parts of no liquidity, followed by huge spikes. This is most definitely not a healthy sign and should be treated with caution.
The further sign of warning should be the most recent wicks and peaks of the chart itself, upwards and downwards. Looking at the local levels, we can see DAGBTC being above and re-testing a previous key-area of resistance as a critical area of support. Typically, this is a bullish sign and structure, yet the huge indecision of the market asks for additional caution. Still, it is quite likely, should this mentioned area (2091-1956) be successfully turned into a critical area of support, that Constellation will continue its parabolic move once again.
Are indicators supporting the idea of a parabolic continuation?
The TJ-Index is currently showing 5 out of 15 points, during the downtrend. This is in the eyes of an analyst, not a bearish sign, which means, that during the recent retrace, we are entering oversold conditions. This, especially above the previous key-area of resistance, is instead a bullish sign and could be indicating a soon reversal, which indeed supports the parabolic continuation. The FOMO Algorithm is yet still showing a Sell-signal, which has occurred quite a while ago. This is indicating a soon expected reversal, yet NOT true bullishness. The further downside, towards the parabolic support, can be expected.
Overall, DAG/BTC is, without a doubt, one of the most bullish pairs, yet also one of the riskiest pairs of the recent market. The very low liquidity and huge, not-healthy volume spikes are asking for caution with this pair. This being said, the further downside from the current levels can be expected, but are statistically not likely. We have seen this mentioned support historically is always touched before continuation. So, there is no statistical reason to believe that it will be different this time. With such risky pairs, the importance lies in risk management.
This Technical Analysis is made by Kong Trading. The provided Analysis should not be considered financial advice!