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With Bitcoin Expect the Unexpected

BITFINEX:BTCUSD   比特幣 / 美元
Amazing how fast sentiment can change. Last week it looked like we were going to $20k. Now here we are testing monthly lows.

I'm seeing people that were permabulls now asking how you short this market. Reddit has 10 posts a day about market manipulation. The choppy nature of the market has taken its toll.

But historically speaking, I do not like the idea of a crash to new lows right here. It just doesn't fit the prototypical bear market reaction. We are in the 3rd major leg down in the bear market and this leg is normally not very steep. It tends to be long, choppy, flat downward trend that has bull traps and bear traps. It chops everyone up. We are already seeing how whales are running stops and killing both bulls and bears.

Also because of the move to $10k and the $6k, we've already taken a lot of people out of the market and I just don't think there was enough volume on the way up to take this market down a lot further. That's usually why these types of down moves are less aggressive. To simplify, we are going to run out of sellers so it then becomes more profitable to take it it back up for awhile.

So This is an area I look to build a long position for a bounce. The bulls have taken a beating but I think the market will now work to punish shorts.

We can certainly go down further and I would actually like a quick sharp move to $6800 to run stops, but I'll be looking for a bounce here anyway. And just by the nature of this move down I think this bounce can go much higher than people think. I keep seeing a lot of traders hoping to see $8000 or $8500 so they can "short it hard." That's usually when you get a bear market rally that runs over people that just started to short the market.

It's also a perfect time to have a convincing bull trap rally and jump over that long term trendline down so bulls start buying up the rally. Then make a higher high in the short term to suck in more bulls before the next wave down. Bear market rallies are some of the strongest rallies you see in markets, so do not be surprised if we go up to $10k. After that, we will head back down.


評論:

I traded silver at this time and this reminds me of similar sentiment. In this case silver went sideways for awhile before putting in a convincing rally over the downtrend line. I don't think we'll get that much sideways action as bitcoin tends to move faster, but this is the kind of rally I'm looking to see.
評論: We got a quick flush and a reversal, but I do not see the kind of volume I'd like to see for a sustained bounce. Also on TD we are on day 7, so there's 2 days left. Still potential for lower prices in the short term.

I'm buying non-leveraged as this a counter trend trade. I still believe it's likely to have a more sustained bounce soon and short term bottom will form. Since I scaled in long all last night, I took partial profits on this bounce and will look to rebuy at lower prices or add if I see some better signs such as volume and sustained upwards trends.
評論: Got new Lows today on a TD9 daily candle. Again, this is an area that is scary to buy but I will continue to add here bit by bit. About every $2000 I get a small order filled.

Yes, we can go a lot lower, but I'm fine with that because of the daily count and oversold nature. Even if we got quite a bit lower, I'm OK with turning this swing trade into a long term hold. I wouldn't do this if I wasn't bullish on bitcoin long term.
評論:

This should be a good reversal. Got a 15 minute engulfing that busted the morning range. In 25 min we confirm with we get hourly engulfing. Good volume. This type of move often won't pull back and let people in but at some point I'll look to add more on a pullback
評論:

Higher highs on the 4 hour. Looking good to make higher highs on the daily tomorrow. This will bring a lot of buyers back in. There isn't a lot of resistance between here and $7700 so it could there fast.
評論:

Bitcoin made to the .328 of the last small wave down. We got a pullback so now its time to test the buy zone. I'm looking to find support between $6900 and $7100. I expect some sideways movement today but I want to see this zone vacated by end of day to form a neutral daily candle. I'd like to see higher highs tomorrow.

Below $6850 is bearish. Closing near lows of the day would be a concern. Since this is is a countrend trade its bearish. But I look at risk vs. reward.

Get an average price of $7000 you risk $150. If we bounce I look for $7700 as target one and I'll buy any pullback. (4 to 1) Then I look for $8000 area as a 2nd target (5 to 1). My original idea is that we go higher, so thats still in play but those are safe targets. I need to see price action to determine if higher prices are possible.

And again, $6850 is where I get out because risk is too great.
評論:

As we can see, $6850 didn't hold and this market looks weak. So 2 things happen. Either we range for a few days, find support and make our way back up or we fall through and start making lower lows. There is a chance bitcoin could from a double bottom near $5800 and bounce from there. But under $6900 right now favors bears, so I will no longer take a long trade.

I took a small short but its not ideal place to short. So I have a tight stop. I'll look to add if we drop below $6440. But more or less, I'm looking for the market to give me a clearer signal. So mostly just watching and waiting.
評論: I covered my short for now. Will re-add if we break lower. But it bothers me that everyone is incredibly bearish. That doesn't mean we can't have a flush down to $5800 but I think in the next 24-36 hours we find a short term bottom and rally. Potentially to $7700. This area can be strong resistance and in the past we've often visited the support multiple times and form a descending triangle before breaking down.

So far, no real signs of a reversal so just watching and waiting before going long. We consolidated in this range now for 48 hours and we tried to break down last night and couldn't break the low. If its going to drop it needs to happen soon or smart money is going to short squeeze everyone that has stops over this structure.
評論:

I was out yesterday and couldn't update in real time, but as I said in my last post, I covered my short. I eventually went long. This chart explains why.

When a market is trending it will stop, consolidate and weaken until it breaks down like the blue box. This green area was different. It was accumulation.

First you can see that bitcoin had the chance to fall below $6400 but bears couldn't push down. Then the consolidation was choppy and tooked way too long for consolidation. And lastly, we had 6 spikes down that were aggressively bought. That was smart money protecting that area.

Now we have broke up and started the squeeze. There is a good chance they will try to drive the price up and kill anyone that has shorted this. There are multiple areas to run short stops and multiple trendlines that can break. Plus as it goes up, we could get major FOMO.

As I said, I'm looking for $7700 on this first run then I'll re-evaluate
評論:

It looked good for awhile but we hit that $7200 area and it dropped like a rock. However, I still believe we are in accumulation and as long as this range holds, I will remain long. Below the range and we should break down and go test $5800. I'm still in long from this point though part of my position was stopped out on this drop. I just bought back and will put a stop at $6420.

If you want to be safe, you can just wait until we break this range as its more likely that we get a sustained move once we either break $7200 up or break $6400. Since I was in a position and have a stop close to my entry I'll continue to let this trade work.
評論: Forgot to mention that chart to the left is bitcoin in 2014, which shows an example of an accumulation phase before an aggressive spike higher. This is what I'm looking for but it is invalid if we break $6400
評論:

MASSIVE short squeeze. This thing can run over shorts for days, so do not short. Its too early to call a target, but bitcoin can very easily shoot to $10k. Possibly higher. I'll update targets after we get more info
評論:

Here is an overlay of how I believe this lines up and what kind of move we could get if it plays out like this
評論:

Here we are a month later. I'm not 100% sure this will be the top, but if it is, then my original chart would have been perfect.

This is exactly what I'm looking for right now. A slow grind lower to retrace a breakout that never pulled back last fall. Likely around $4k which would provide a good fib target area.

We'll see what happens. Its still quite possible we see another push above $10k. But I'm short and hoping to hold this short position for a few 2-3 months
評論:

This was worth updating this idea as we eventually did exactly what I expected coming off the initial $6500 low. At this point, I still favor new lows some time in late summer.
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