When bitcoin passed below $7000 it really put price into a new position. And breaking below $6500 also confirmed that we in danger of lower prices.
It's not too late to catch support and rally from here. The market can do anything. But its not ideal area for a major low.
My goal here is to step back and look at a weekly log chart and really try to digest what is happening. The ultimate goal is to be prepared so we can make an amazing trade.
The Weekly Cycle
Since the low in May 2016, bitcoin finds a low about every 25-30 weeks. It can have a short or a long cycle, but those occurrences are less than 20%. The week 22 cycle low in February of 2018 is not uncommon after a parabolic cycle. We have to remember that bitcoin went from $3k to $20k then dropped to $6k all in a short cycle. That is historic levels of volatility for any asset and can shorten a cycle.
Today, in mid June 2018 we are at week 18 of the current cycle. So I’m looking for a low in 7-14 weeks. August to September 2018.
I like this date for another reason. My original historical analysis of parabolic bear markets also led me to that same conclusion. So this fits the timeline for a separate but related analysis.
What about price?
There are 2 areas of support. $5000 was never tested so thats a magnet. $3000 was an important breakout with a long wich and high volume. That area should have some buy support. There’s also a 200 week moving average that will fall in that area during our buying time zone. A long term trend line in that area will add some support.
Do we have to go lower than $6k? No. The market can do anything and a certain % of the time, it will have a short or long cycle. This is all about probability.
Can we go below $3k? Yes. I just don’t think it's likely so I’m not going to look into that unless we get to $3k quickly.
Looking for Confluence
In every trade I make, I look for a confluence of factors. The more of these signs I put together, the more confidence I get in the trade. In order to gain the most confidence, there are a number of things to look for on the charts:
Also need Sentiment to Collapse
I hate to see this pain from my crypto brothers and sisters but the sad news is that bad sentiment is what drives an important low. In other words, people have to feel the pain and the herd needs to fully capitulate.
Summary
Will I get all these signs? No way. But the more of these signs I get, the more confidently I can take a position and hold for the very long term.
This will be the most important trade of my life. This will be a chance to turn even a small amount of capital into a retirement account by 2020. I'm hoping it comes together as it will lead to bigger gains.
However, its important to fully understand that NOTHING in trading is guaranteed. All of this analysis is just setting up probabilities. Yes. I want to see this happen. But the market doesn't have to do that, so if I don't get it, I make adjustments.
This is why poker players often make good traders. They understand setups and probabilities. We are sitting at the table with sharks (smart money). We have a hand and looking for an ace on the flop to go all in. Nothing says we have to get our card. If we draw shit, we just fold and wait for the next hand (new TA). But if we make a hand, we'll have a chance to take a monster pot.
It's not too late to catch support and rally from here. The market can do anything. But its not ideal area for a major low.
My goal here is to step back and look at a weekly log chart and really try to digest what is happening. The ultimate goal is to be prepared so we can make an amazing trade.
The Weekly Cycle
Since the low in May 2016, bitcoin finds a low about every 25-30 weeks. It can have a short or a long cycle, but those occurrences are less than 20%. The week 22 cycle low in February of 2018 is not uncommon after a parabolic cycle. We have to remember that bitcoin went from $3k to $20k then dropped to $6k all in a short cycle. That is historic levels of volatility for any asset and can shorten a cycle.
Today, in mid June 2018 we are at week 18 of the current cycle. So I’m looking for a low in 7-14 weeks. August to September 2018.
I like this date for another reason. My original historical analysis of parabolic bear markets also led me to that same conclusion. So this fits the timeline for a separate but related analysis.
What about price?
There are 2 areas of support. $5000 was never tested so thats a magnet. $3000 was an important breakout with a long wich and high volume. That area should have some buy support. There’s also a 200 week moving average that will fall in that area during our buying time zone. A long term trend line in that area will add some support.
Do we have to go lower than $6k? No. The market can do anything and a certain % of the time, it will have a short or long cycle. This is all about probability.
Can we go below $3k? Yes. I just don’t think it's likely so I’m not going to look into that unless we get to $3k quickly.
Looking for Confluence
In every trade I make, I look for a confluence of factors. The more of these signs I put together, the more confidence I get in the trade. In order to gain the most confidence, there are a number of things to look for on the charts:
- A low in August or September
- Price between the $3000 - $5000 area
- Price near the 200 DMA
- Price near that long term trendline
- A weekly bullish reversal candle (possibly big wick)
- High volume on the reversal
- Near 30 day cycle low range
- A bullish pattern (maybe a wedge break)
- A confirming weekly candle
- A TD8 or TD9 on the weekly candle
- A measured move algo target
Also need Sentiment to Collapse
I hate to see this pain from my crypto brothers and sisters but the sad news is that bad sentiment is what drives an important low. In other words, people have to feel the pain and the herd needs to fully capitulate.
Summary
Will I get all these signs? No way. But the more of these signs I get, the more confidently I can take a position and hold for the very long term.
This will be the most important trade of my life. This will be a chance to turn even a small amount of capital into a retirement account by 2020. I'm hoping it comes together as it will lead to bigger gains.
However, its important to fully understand that NOTHING in trading is guaranteed. All of this analysis is just setting up probabilities. Yes. I want to see this happen. But the market doesn't have to do that, so if I don't get it, I make adjustments.
This is why poker players often make good traders. They understand setups and probabilities. We are sitting at the table with sharks (smart money). We have a hand and looking for an ace on the flop to go all in. Nothing says we have to get our card. If we draw shit, we just fold and wait for the next hand (new TA). But if we make a hand, we'll have a chance to take a monster pot.
評論:
評論:
I'm looking for a top at $6800 or $7100 area in the next few days. I'm short and managing risk with stops above resistance. If we get to that green box and close over the triangle trendline then it becomes bullish and this idea is invalid.
Again, this is about managing risk and trying to take advantage of a low risk, high reward scenario where we short with important stops to keep our losses down and then look to buy the bottom. If we get capitulation, then this could be an amazing trade. But things need to line up for this to happen and we need to remain nimble, cautious and keep our losses low if the market proves to be bullish.
Again, this is about managing risk and trying to take advantage of a low risk, high reward scenario where we short with important stops to keep our losses down and then look to buy the bottom. If we get capitulation, then this could be an amazing trade. But things need to line up for this to happen and we need to remain nimble, cautious and keep our losses low if the market proves to be bullish.
評論:
We have the break down. There was an IHS in play but thats not looking good with the aggressive down move. If we break $6100 and close an hourly below it I would consider the IHS invalid.
This chart is looking at the BTC price vs. BTCLONGS. You can see that right now a lot of the longs that bought during the up move are now underwater. Below $6100 another good chunk will be at a loss. This can be fuel for a big move down as all these longs lose faith in the IHS and start thinking "here we go again"
Still short. Still looking for a major low. Still expect it after July 20th. Hoping for a capitulation because that would actually be more bullish and give us some fuel for a nice bounce.
We have the break down. There was an IHS in play but thats not looking good with the aggressive down move. If we break $6100 and close an hourly below it I would consider the IHS invalid.
This chart is looking at the BTC price vs. BTCLONGS. You can see that right now a lot of the longs that bought during the up move are now underwater. Below $6100 another good chunk will be at a loss. This can be fuel for a big move down as all these longs lose faith in the IHS and start thinking "here we go again"
Still short. Still looking for a major low. Still expect it after July 20th. Hoping for a capitulation because that would actually be more bullish and give us some fuel for a nice bounce.
To update. We are on week 22 and would get a week 25-26 cycle at the end of July. We will also get a 60 day cycle low in late July.
At this point, I believe the probability is high that we get a new low below $5700 sometime in late July. it can be a early cycle around July 24th or it can be a late cycle around August 6th, but most likely it comes within 5 days July July 25th. I also believe its most likely between $4000 - $5000, but it could go lower.
The less likely option is that we move up to $7200 area or higher then pullback and the 60 day cycle is a higher low above $5700 or a double bottom. This would be more difficult to trade as we'd still be open for a potential weekly cycle to make a low in September. I would still buy a cycle low in this area, just would have to hold off on taking major long term positions.
Lastly, it is possible that we made the weekly cycle low last week. It would be a short cycle that didn't come with any volume or other signals. If that is the case, then really nothing I would have done differently as I would never buy on a weak signal. I would just look for more confirmation from weekly swing low to buy more long term positions.