Even though I'm a long term bull, I've been bearish after the first big drop in December. Many investors think its shorters, bears, bear whales or market makers that drive down a market. It isn't. It's a lack of buyers.
You have to understand the current psychology. A lot of people bought bitcoin last fall simply because price was going up. Since it isn't going up now, those buyers will not buy more. We now have 3 major occasions that have dumped at least 40%. These investors that took heavy losses in those dumps will not come back into the market. Without a new influx of buyers, we don't have enough buying power to take it over $12k. As prices go lower, more people get nervous and thats how you get such heavy selling.
That doesn't mean it can't bounce. And certainly its possible that a major event happens that reignites bullish momentum. Even though I've been bearish for a long time, I realize bitcoin has been able to buck some trends and it tends to move faster than any other asset. For those reasons, I'm constantly looking for bullish signs that buyers are ready to step in and this market is ready to move up.
What about Price in the Short Term?
Today is the end of the week and we can see that this is a nasty looking weekly candle right now. Bitcoin needs a hard turn today to give bullish traders some kind of hope. There are a few critical technical indicators to watch.
1. The trendline is one of the accelerated trendlines from this fall. Its drawn in a way that it touches the most candles (9). A weekly close well below that line is bad.
2. You can make a trendline just connecting the bottom of candles and it will show some support around $7000-$7300 (depending on which bitcoin chart you use)
3. There is a .786 pullback of the move up from $6800 to $11700. That line is around $7200.
The best possible thing to happen is to see a high volume rally today that ends the day above $8000, gets a close above all trend lines and puts a long wick reversal candle on the weekly chart. If that happens, then I think buyers will step in and at least rally towards $9500 - $10000. You then have to get through some tough resistance to get back into a bull market, but there would be some hope.
A weekly close below $7000 is really bad. A number of elliott wave traders go full bearish. Daily candle traders stay bearish. We'll be on a TD5 daily and TD2 weekly which will be bearish. The trendline traders go bearish. Death cross traders are even more bearish. Day traders sell all rallies. Investors get scared. The bear channel will still be intact. New lows then drive down hope. Even the RSI has room to run down. And the next major trendline support is at the $4000 area.
As I've been saying, this is a time to be cautious. If we get some heavy volume buying and a clear reversal candle then there is nothing wrong with taking a long, just have a reasonable stop loss in case we lose buying momentum.
You have to understand the current psychology. A lot of people bought bitcoin last fall simply because price was going up. Since it isn't going up now, those buyers will not buy more. We now have 3 major occasions that have dumped at least 40%. These investors that took heavy losses in those dumps will not come back into the market. Without a new influx of buyers, we don't have enough buying power to take it over $12k. As prices go lower, more people get nervous and thats how you get such heavy selling.
That doesn't mean it can't bounce. And certainly its possible that a major event happens that reignites bullish momentum. Even though I've been bearish for a long time, I realize bitcoin has been able to buck some trends and it tends to move faster than any other asset. For those reasons, I'm constantly looking for bullish signs that buyers are ready to step in and this market is ready to move up.
What about Price in the Short Term?
Today is the end of the week and we can see that this is a nasty looking weekly candle right now. Bitcoin needs a hard turn today to give bullish traders some kind of hope. There are a few critical technical indicators to watch.
1. The trendline is one of the accelerated trendlines from this fall. Its drawn in a way that it touches the most candles (9). A weekly close well below that line is bad.
2. You can make a trendline just connecting the bottom of candles and it will show some support around $7000-$7300 (depending on which bitcoin chart you use)
3. There is a .786 pullback of the move up from $6800 to $11700. That line is around $7200.
The best possible thing to happen is to see a high volume rally today that ends the day above $8000, gets a close above all trend lines and puts a long wick reversal candle on the weekly chart. If that happens, then I think buyers will step in and at least rally towards $9500 - $10000. You then have to get through some tough resistance to get back into a bull market, but there would be some hope.
A weekly close below $7000 is really bad. A number of elliott wave traders go full bearish. Daily candle traders stay bearish. We'll be on a TD5 daily and TD2 weekly which will be bearish. The trendline traders go bearish. Death cross traders are even more bearish. Day traders sell all rallies. Investors get scared. The bear channel will still be intact. New lows then drive down hope. Even the RSI has room to run down. And the next major trendline support is at the $4000 area.
As I've been saying, this is a time to be cautious. If we get some heavy volume buying and a clear reversal candle then there is nothing wrong with taking a long, just have a reasonable stop loss in case we lose buying momentum.
評論:
Stopped out of this trade. Will reassess. Likely take another shot if we get to $7200 if I see bullish signs. Again, its about risk reward and still seeing declining down momentum on longer time frames. If I see a potential reversal then I will need to see follow through before close to keep the trade.
Good price action while I was writing this. So I will actually go long for a short term trade because the 4 hour shows a TD bottom and good divergence. Bullish price action so good risk-reward because of the confluence of support. Looking for a bullish break of this morning's range now.
Of course, this is still countertrend so I stop at lows.