After careful consideration, and four months of daily analysis, I am of the opinion that this idea is the closest to what we will see unfold in the coming months.
As many of you know, I have posted many bullish and bearish scenarios. Some are extremely bullish and some extremely bearish while others fall somewhere in between.
Like the chart of Bitcoin, I have oscillated back and forth between the two sentiments.
I have concluded that if Bitcoin is truly bullish then let's see proof before going long on Bitcoin and alt coins.
Bitcoin is bullish if and only if these three conditions are satisfied:
1. The price breaks above the red resistance and stays there
2. The price breaks above the downtrend and finds support
3. The 50 day VWMA crosses above the 200 day (Golden Cross)
If all of these conditions are satisfied, then I will go long on Bitcoin and alt coins (specifically Digibyte).
Otherwise, I will go in and out of the market executing strategic trades based on the crash pattern until Bitcoin (and alt coins) hits the floor.
The crash pattern fractal is very precise. I copied the fractal from the 119th day of the Mt. Gox crash and pasted it on today's candle (119th day of present day crash).
Then, I lined up the fractal so that its peaks (during the crash) meet resistance at the broken red support.
Now, we have buy and sell targets. These targets are not intended to be precise. Rather, they are intended to capture the broader moves of Bitcoin if this idea is valid and plays out.
It is true that the two crashes are unrelated. Different circumstances surrounded both events. That being said, a crash is a crash. Meaning, we should not expect that this crash will be instantly over just because institutional money is coming into the space, Bitcoin is becoming more widely adopted, or because there are different players in the market.
Human behavior is the same. There will always be greed, fear, uncertainty, doubt, panic selling, and other psychological elements in this market or any other market.
Therefore, I expect that this crash will be long and drawn out like the former one. However, from a broader perspective, it doesn't really matter since in the end Bitcoin should attain an extremely high valuation in a few years.
But, like some of you, I cannot afford to have my portfolio dwindle down to peanuts while I wait for this crash to terminate. The point is, maybe it isn't too wise to go long in this market unless Bitcoin proves itself bullish or until the crash terminates.
We must manage capital carefully since erosion of portfolio is extremely painful and can have catastrophic implications on our financial and mental well being.
Sorry that this is turning into an essay. Let me conclude with why I think the crash pattern is the most probable scenario.
1. Bitcoin is in a temporary bubble which has burst since it went from $100 to $19,891
2. The crash pattern fractal from Mt. Gox has unmistakable characteristics that align with present day crash
3. The 50 volume weighted moving average has crossed the 200 (death cross) and the two lines are diverging from each other and will act as dynamic resistance for the price
4. We have yet to see a capitulation phase which is a requirement in a crash pattern
5. BTC has aggressively broken the .618 which implies that it will at least head to the .786 Fibonacci level
6. An 87% retracement is reasonable for a crash pattern (the former was about 91% retracement)
7. The critical red support was broken which means that it will now become a major resistance
8. We have failed to break the downtrend so we can expect lower highs which leads to capitulation
Finally, I could be 100% wrong in my analysis. It really isn't about being right or wrong. It's about risk assessment. I would love to hear your feedback. This post isn't investment advice so please don't construe it as such.
As many of you know, I have posted many bullish and bearish scenarios. Some are extremely bullish and some extremely bearish while others fall somewhere in between.
Like the chart of Bitcoin, I have oscillated back and forth between the two sentiments.
I have concluded that if Bitcoin is truly bullish then let's see proof before going long on Bitcoin and alt coins.
Bitcoin is bullish if and only if these three conditions are satisfied:
1. The price breaks above the red resistance and stays there
2. The price breaks above the downtrend and finds support
3. The 50 day VWMA crosses above the 200 day (Golden Cross)
If all of these conditions are satisfied, then I will go long on Bitcoin and alt coins (specifically Digibyte).
Otherwise, I will go in and out of the market executing strategic trades based on the crash pattern until Bitcoin (and alt coins) hits the floor.
The crash pattern fractal is very precise. I copied the fractal from the 119th day of the Mt. Gox crash and pasted it on today's candle (119th day of present day crash).
Then, I lined up the fractal so that its peaks (during the crash) meet resistance at the broken red support.
Now, we have buy and sell targets. These targets are not intended to be precise. Rather, they are intended to capture the broader moves of Bitcoin if this idea is valid and plays out.
It is true that the two crashes are unrelated. Different circumstances surrounded both events. That being said, a crash is a crash. Meaning, we should not expect that this crash will be instantly over just because institutional money is coming into the space, Bitcoin is becoming more widely adopted, or because there are different players in the market.
Human behavior is the same. There will always be greed, fear, uncertainty, doubt, panic selling, and other psychological elements in this market or any other market.
Therefore, I expect that this crash will be long and drawn out like the former one. However, from a broader perspective, it doesn't really matter since in the end Bitcoin should attain an extremely high valuation in a few years.
But, like some of you, I cannot afford to have my portfolio dwindle down to peanuts while I wait for this crash to terminate. The point is, maybe it isn't too wise to go long in this market unless Bitcoin proves itself bullish or until the crash terminates.
We must manage capital carefully since erosion of portfolio is extremely painful and can have catastrophic implications on our financial and mental well being.
Sorry that this is turning into an essay. Let me conclude with why I think the crash pattern is the most probable scenario.
1. Bitcoin is in a temporary bubble which has burst since it went from $100 to $19,891
2. The crash pattern fractal from Mt. Gox has unmistakable characteristics that align with present day crash
3. The 50 volume weighted moving average has crossed the 200 (death cross) and the two lines are diverging from each other and will act as dynamic resistance for the price
4. We have yet to see a capitulation phase which is a requirement in a crash pattern
5. BTC has aggressively broken the .618 which implies that it will at least head to the .786 Fibonacci level
6. An 87% retracement is reasonable for a crash pattern (the former was about 91% retracement)
7. The critical red support was broken which means that it will now become a major resistance
8. We have failed to break the downtrend so we can expect lower highs which leads to capitulation
Finally, I could be 100% wrong in my analysis. It really isn't about being right or wrong. It's about risk assessment. I would love to hear your feedback. This post isn't investment advice so please don't construe it as such.