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Break or Fake?: We'll know soon.

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I see social media awash with the posts about the BTC breakout.

We are close. Very close to a legit breakout and if it comes, I'll retract a good amount of the ill talk I did on the halving theory (Not all of it, I still think assuming flawless cycles on 2 events is silly) - if I am wrong, I'll change my stance.

However, if this is going to fail we will be into the final baiting of the bulls now.

Ugly stuff if we reject.

And if we reject, then the STF and halving theories fail. A failure of these would probably result in the biggest retail loss of all time.

Lot of people heavily betting this is a fact and not a hypothesis.

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Social media live feed.

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Reloaded on my deep OTM COIN puts.

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Lot of people wanting to tell me this is a bullish pattern and not a bearish one. My point is if you check the pattern hit rate, it's actually close to a coin flip.

There's no reason to be confident to either side. The best thing to do is buy the extreme lows if bullish, short the extreme highs if bearish and set good stops. Then you have 1:3 RR on a setup that has the min odds of 40% of working. Which is a trading edge.

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Last time there was a failed instance of this type of shape for a BTC bull move we dropped 75%.

That's the known risk based on the charting history.

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BTC is at the 76 retracement of the full drop. Statistically the riskiest time to be bullish.

Usually you're wrong or you can buy the same price on a retest.

Like, over 85% of time one of those things happens.

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^^ Which is a far higher hit rate than any variant of bullish flag like pattern.

Significantly higher.

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Here's stats for an automated test of bull flags on the daily chart in BTC since 2015.

Bull Flag Pattern P&L Stats in BTC:

- Total Bull Flags: 1602
- Wins: 576
- Losses: 1026
- Win Rate: 36.0%
- Average Gain per Flag: -2.11%
- Total Gain: -3373.25%

--
This was on settings people use quite often. Code attached if you want to test your own settings.
--
import yfinance as yf
import pandas as pd

# Parameters for bull flag detection
PULLBACK_DAYS = 5
BREAKOUT_DAYS = 5
WIN_THRESHOLD = 0 # 0% return or higher is considered a "win"

def download_data(ticker="BTC-USD", start="2015-01-01", end="2023-12-31"):
"""Download BTC daily data from Yahoo Finance"""
data = yf.download(ticker, start=start, end=end)
return data

def detect_bull_flags(data, pullback_days=PULLBACK_DAYS, breakout_days=BREAKOUT_DAYS):
"""Detect bull flags and calculate post-breakout performance"""
flags = []
data['High_Close'] = data['Close'].rolling(pullback_days).max()

for i in range(pullback_days, len(data) - breakout_days):
pullback_data = data['Close'].iloc[i-pullback_days:i]
if (pullback_data[-1] < pullback_data.max()) and (pullback_data.min() < pullback_data[-1]):
breakout_level = data['High_Close'].iloc
post_breakout_data = data['Close'].iloc[i:i + breakout_days]
breakout_gain = (post_breakout_data[-1] - breakout_level) / breakout_level
flags.append({
'Date': data.index,
'Breakout_Gain (%)': breakout_gain * 100,
'Win': breakout_gain > WIN_THRESHOLD
})

return pd.DataFrame(flags)

def display_pl_stats(bull_flags):
"""Display win/loss and P&L statistics for bull flags."""
wins = bull_flags['Win'].sum()
losses = len(bull_flags) - wins
win_rate = (wins / len(bull_flags)) * 100
avg_gain = bull_flags['Breakout_Gain (%)'].mean()
total_gain = bull_flags['Breakout_Gain (%)'].sum()

print("Bull Flag Pattern P&L Stats in BTC:\n")
print(f"- Total Bull Flags: {len(bull_flags)}")
print(f"- Wins: {wins}")
print(f"- Losses: {losses}")
print(f"- Win Rate: {win_rate:.1f}%")
print(f"- Average Gain per Flag: {avg_gain:.2f}%")
print(f"- Total Gain: {total_gain:.2f}%")

def main():
# Step 1: Download Data
data = download_data()

# Step 2: Detect Bull Flags
bull_flags = detect_bull_flags(data)

# Step 3: Display P&L Stats
display_pl_stats(bull_flags)

if __name__ == "__main__":
main()

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It's not as scary to bet against if you check the numbers. Odds are not anywhere near as bad as many are presenting them to be for bears.

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If you'd bet on all instances of a bull flag in BTC on the daily chart since 2015 when we were at all time high you'd have been down. You'd be down more now.

This is the performance of the pattern we're discussing.

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Here's a code that will look for patterns broadly the same as this in BTC history and show you a chart of the time and what happened next. Sometimes it pops. Others it goes sideway. And sometimes it slams. To be profitable with the pattern, you'd have to be very good with your stop loss and take profit.

Here's the net stats:
BTC Pattern Detection Statistics:
- Total Patterns Detected: 137
- Average Volatility During Consolidation: 0.17
- Average Outcome Gain After Pattern: 1.11%
- Win Rate (Positive Outcome): 57.66%

7.66% above random. Given that the move overall has favoured the upside - this should be considered a meaningless result. It's random. Tiny tiny edge to bulls.

It's a coin flip.
Here's a sample of different outcomes.

--
import yfinance as yf
import pandas as pd
import matplotlib.pyplot as plt

# Parameters for pattern detection
UPWARD_MOVE_DAYS = 3 # Number of days for initial upward move
UPWARD_MOVE_THRESHOLD = 0.1 # Minimum % gain in upward move (e.g., 10% increase)
CONSOLIDATION_DAYS = 10 # Number of days for sideways consolidation
VOLATILITY_THRESHOLD = 0.02 # Minimum % range in consolidation to indicate volatility
POST_PATTERN_DAYS = 5 # Number of days to show after the pattern for outcome

def download_data(ticker="BTC-USD", start="2015-01-01", end="2023-12-31"):
"""Download BTC daily data from Yahoo Finance"""
data = yf.download(ticker, start=start, end=end)
return data

def detect_pattern(data):
"""Detects the upward move followed by volatile sideways consolidation"""
patterns = []

for i in range(UPWARD_MOVE_DAYS, len(data) - CONSOLIDATION_DAYS - POST_PATTERN_DAYS):
# Step 1: Detect significant upward move
initial_move = data['Close'].iloc[i - UPWARD_MOVE_DAYS:i]
move_pct = (initial_move[-1] - initial_move[0]) / initial_move[0]

if move_pct >= UPWARD_MOVE_THRESHOLD:
# Step 2: Check for volatile sideways consolidation
consolidation_period = data['Close'].iloc[i:i + CONSOLIDATION_DAYS]
price_range = consolidation_period.max() - consolidation_period.min()
volatility = price_range / consolidation_period.mean()

if volatility >= VOLATILITY_THRESHOLD:
patterns.append({
'Start_Date': data.index[i - UPWARD_MOVE_DAYS],
'End_Date': data.index[i + CONSOLIDATION_DAYS - 1],
'Outcome_End_Date': data.index[i + CONSOLIDATION_DAYS + POST_PATTERN_DAYS - 1]
})

return patterns

def plot_patterns(data, patterns):
"""Plots each detected pattern on a zoomed-in chart with outcome"""
for pattern in patterns:
start, end, outcome_end = pattern['Start_Date'], pattern['End_Date'], pattern['Outcome_End_Date']
pattern_data = data.loc[start:outcome_end]

plt.figure(figsize=(12, 6))
plt.plot(pattern_data['Close'], color='gray', label="BTC Price", alpha=0.5)
plt.plot(data['Close'].loc[start:end], color='blue', label="Detected Pattern")
plt.axvline(x=end, color='red', linestyle='--', label="Pattern End")
plt.title(f"BTC Pattern from {start.date()} to {end.date()} (Outcome Shown)")
plt.xlabel("Date")
plt.ylabel("Price")
plt.legend()
plt.show()

def main():
# Step 1: Download BTC Data
data = download_data()

# Step 2: Detect Patterns
patterns = detect_pattern(data)

# Step 3: Plot Patterns
if patterns:
plot_patterns(data, patterns)
else:
print("No patterns detected.")

if __name__ == "__main__":
main()

--

註釋

People who tell you this is a high probability bull setup in BTC have not done the work. They've looked for times BTC popped and think they know a bullish pattern.

They've not checked all instances of that pattern forming and how it would look/feel in real time in the false ones.

The hit rate of these things is crazily overstated.

You can't make money trading these without good stops and targets. Anyone saying you can, has not tried it.

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This is the retest of the 76. Should sell soon if the 76 is resis.

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People coming into the market these days, especially crypto, are taught bad habits. Things we were by default taught not to do when I got into the game.

They're taught the probabilities of things are far higher than they are.

They're taught you should have 100% win rate or you suck (And they're taught this by people with low win rates that just don't admit to losses because they let the loss get worse rather than stop out).

They're taught to take big risks in volatile assets.

And they are taught thinking is a waste of energy.

They execute a strategy intended for low vol assets on the highest vol ones.

And seem to think that's the safest thing in the world.

It's scary to watch.

Could end so badly.

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And over and over it's the same old routine if you question it.

"You don't understand"

"You have a weird love for dirty fiat"

Etc etc.
--

I do understand. It's not hard to understand.

The USD crash narrative is not new. When I got into the game, it was silver we were to buy because the USD was dying. Silver has never traded at those prices since - and inflation didn't stop.

You know what happened to the silver narrative with all it's big name promoters and logical expectations of higher and higher price?

It died.

No one talks about it now.

Ideas comes and go.

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Like the short squeeze narratives of 2021. It was all over the place. You could not go to anywhere on Reddit and not hear about it. People were promoting it in the most random of subs.

And now, it's dead.

Unless people have a vested interested in it (Are screwed and need it to get better) - no one cares. Everyone forgot. So quickly.

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All I want people to understand about the prediction models for BTC is it does not matter how confident the person presenting it is now.

If it does not happen, they'll just stop talking about it.

Most of them won't even update that they were wrong.

They'll just move on.

And followers, will be fucked.

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If you present a bear thesis on BTC by default bulls have been taught to attack and mock you.

It's "Us and them" and if you are not a bull you hate BTC and want it to fail.

Total nonsense. Some people are bitter and like to see failures. But not most ...

What I don't want to see if the failure of BTC leading to the failure of people.

That's very different.

Which is why I propose common sense risk protection.

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Next time you see someone who knows for sure what's going to happen in 6 months or 6 years, ask yourself;

"Does this person really know the future or have they tricked themself into believing they do?"

And then consider carefully how much you want to take the word of someone who may have been able to trick themself into thinking they know the unknowable future.

交易進行

I don't trade BTC because the stop hunting, slippage and spreads really make it a waste of time to trade.

But I did size up in my proxy bet on COIN. COIN is now my biggest position.

Short 219. Via various methods.

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Rational for sizing up at this moment is the possible butterfly above the big 76 highlighted earlier.

If I am right, the selling has to start soon. And be strong.

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The best point I've seen in the comments against my thesis (Outside of recycling the bull flag as a high win rate idea despite the provided evidence against that) is it'd be fitting to have a FOMO rally. To get most people offside.

But if we use game theory ideas like that, then surely the best move is the fake it both ways.

Step 1 - Imitate the breakout into the "Known" breakout dates.

Step 2 - Yank it. Strong and hard. Induce bear FOMO and trigger chasing bulls stops.

Step 3 - Crank it back to a nominal new high. Trashing the bears who didn't short the rally/cover the drop and making it look like the bull break is the only outcome.

Step 4 - Yank it again. Slow and steady - and by this time, everyone think it's a buy the dip.

I see this as a super credible risk to bears, from that perspective.

I'd like to note at this point (For better or worse) I plan to buy the capitation if it comes so I make money in the rally and can use that to bankroll a bet on the (Uncomfortable) spike.

---
Of course, one could equally argue that the last high was an expression of this exact idea. With the current public attitude much as one would expect in that idea.

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I'd be a buyer around 31K. I'll say that. At that point I can risk $1 and win $10 on the bull side. And I always take those bets.

And I know it's tactically important for bears to buy supports. Makes fading the rally easier - which it's not rational to expect to get right first time.

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The same idea could be easily fit inside of a bullish forecast.

It'd just represent a simple 76 pullback of the rally. So it's entirely viable the net bull thesis would be correct (Granted the models aiming to forecast exact prices and dates would fail) and us still be on the verge of a drop of close to 50%.

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I could go through the entire BTC history and show you this shape many times set up a capitulation. To save time, I'll just do the one we can all see in front of us now.

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TradingView is an awesome resource for traders. The charts, features etc. All super cool.

It's a shame many of the users are against the discussion of trading strategies and methods.

Really, it's a shame. Could be a great place. But usually you end up having to turn off notifications.

People just want to be rude and fight over the unknown as if it is known.

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Just a heads up to those of you who do this. It won't come from me, but if there is a crypto crash - there will be people who you've group bullied (And this is what it would be called in any other context) so will be chomping at the bit to kick you when you're down.

In your worst moments, caustic and spiteful people will do all they can to make you feel worse. And you bring that on yourself, because you do it to others.

It won't come from me. But you do invite it.

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Here's an objective look at every single major breakout in BTC history and comparison to current chart.

Comparing Current Action to All Historic BTC Breakouts.

交易進行

I have shorts in ETH now at 2700 with stops 2840.

I think this might be the end of the crypto rallies.

For the various reasons explained above, I favour ETH as a proxy bet to shorting BTC.

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Back under the 76. This is an interesting spot.

If the trading above this was a false breakout, that should become obvious on the rejection of it.

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Sellers in the critical area. I think even in a bear move there's a bigger chance of a bounce into another low.

Would be more careful with my shorts into a new low and would be looking to scale up into a retracement if it came.

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I expressed my bet here in COIN puts and ETH shorts. Plan into another dump is to look to hedge long in ETH on support. If we break I'll lose a little but it's great insurance against a bull trap.

Then if the bull trap comes, I can use my long profits to make a big house money bear bet on the optimal level.

Will update on more specifics if fill. Below is approx of the trade.

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^ Right idea, wrong level.

This rally can be a bit more inside of bearish correction (And BTC is brutal for head fakes) but in the bear setup this should be some variation of bull trap.

Missed my hedges in this but do have SPX longs.

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This is the retest of the big 76.

So this is where to look for the danger signs. If its a bull trap, should end around here.

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MSTR is next on the hit list for me.

Been waiting patiently on it head faking over that level. Did it in a nice butterfly pattern.

MSTR shorts are next.

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Here's the MSTR setup. I've waited and waited for this. Time to try.

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This would be the ideal short area for traders imo.

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From now on I am just muting anyone in the comments who is just here to tell me to not be a trader.

You have the whole internet. Can't we have this little bit?

We leave you alone. Why can't you do the same?