Long

Short squeeze imminent - big move up soon

Updated

BTC has been showing bottom type behavior for the last few days. The 6k level is holding and shorts are building up. Looking at Heikin Ashi we can also see two dojis as well as signs of bullish reversal. The price might still drop a little but there is much bigger potential for a move up now with a short squeeze and when it does trigger, the price will jump very quickly. It will be easy to miss most of the move. Hence I am long now willing to risk a little for a much bigger return.

This move up will only be invalidated if we somehow drop below $5900 but I don't see that happening for two reasons.
- People who have shorted early on will now start to get concerned about a squeeze and start to close their shorts which will hold the price up.
- Others are starting to see the possibility of a short squeeze and are going to be buying now.

Heikin Ashi indicator: There were two dojis recently as well as a possible first green bar if on the daily we don't go back below $6115 today. I am going to be using this indicator more often as one of the issues I have had in the past is selling or buying too soon on an uptrend or downtrend. This helps iron out the noise and shows the trend.

Shorts have doubled at a faster rate than back in April:

Note

I think the move is going to start soon. Small triangle is about to break.

Note

BTC is taking its time but the pattern looks pretty textbook.

tradermentality.com/2016/02/descending-broadening-wedge.html

Eg, from there:

tradermentality.com/wp-content/uploads/2016/02/USOIL.png

Note

I'm still bullish for now as long as we close near $6600 or above today. If we close around $6400 or below then tomorrow could be bad. If $6200 falls then I think we'll most likely drop to the mid 5ks.

Note

So there's been some massive selling on Bitfinex. The price drop doesn't show it as someone/some group has been buying with hidden orders between $6310 and $6350. Over 10k volume in 30 minutes.

I think we will ultimately go down from here to the mid 5ks. I saw some price action like this a few weeks ago around $7700. There were huge hidden orders which people sold into just like now. The price just kept falling afterwards.

Though have to just watch out for a short squeeze as many who have just sold have shorted. So shorts are going up again. $6200 has to hold now in order to squeeze up in the next couple days though and I don't think it will.

Note

Heikin Ashi indicator is also showing signs of the market switching back to neutral/bearish.

Note

So the price didn't dump any further which means there's a possible big short squeeze being orchestrated. Shorts are near record levels and many are now sitting with Tether after having sold into big hidden orders yesterday. The situation seems primed for a squeeze up now.

I've gotten back in and will hold unless we drop below $6200.

Shorts went up quickly in the last few hours:

BTC is also retesting resistance:

Note

There's large hidden buy orders again now at $6395. Someone is loading up on Bitcoin.

Note

The move up has started without even triggering many shorts yet so it can still go up a long way from here once stop losses start getting hit.

One thing I'm concerned about is Bitmex. I think what's going to hold back big moves in future is Bitmex. This move up began with a 4k BTC buy on Bitfinex, which spiked the price $300, and it happened exactly the minute that Bitmex went on maintenance for an hour. As soon as Bitmex came back online an hour later, we dropped back to $6700. The price was around $6800 pushing to $6900 just before then.

Since Bitmex uses Bitstamp and Gdax prices (bitmex.com/app/index/.BXBT), there must be big money on those exchanges to manipulate the price.

I expect $6600 to hold for now though. Should have a lot of support there from all the sideways in the last couple weeks as well as from the large number of shorts still in play. Some will start to close their short positions now to avoid getting squeezed.

Note

Seems like that pink trendline is important somehow. We took off from it for over 5 times now. We could also be forming a parallel channel between the blue lines but if we get above 7k then we should definitely squeeze up even higher.

Note

I've been away for a bit. The pink line and parallel channel have both been important so far as support and resistance. I think we will have one more trip up to between $7400 and $7500 in the next couple days. Will post why shortly.

Note

I had a look at fin retracements in the past. 0.618 seems to be the target very often. With the current move, the 0.618 retracement is just below $7500.

There is also some similarity with where we are now vs the last move up. We are currently at the 0.5 fib retracement level pushing up against resistance. The same thing happened previously and we quickly jumped to the 0.618 fib level. Yellow areas are equivalent.

I'm not sure what will happen afterwards and I will be selling there. There is still a good chance that the bigger downtrend is not over and that we could have a steep drop to the 5k/ region at some point this year. So I will take profit at around $7450 and watch for a bit before getting back in again.

Note

There's a few things happening now.

- Shorts are being closed steadily before they can get squeezed and the price has gone mostly sideways for two days. This is a neutral sign to me as people think that the price is going to go more up (hence closing their shorts) but there are now fewer guaranteed buyers in the market.

- The price has gone up around 10% in the last week without any major correction. So there is potential for a drop to around $6800 before the next move up. We're also just breaking below what looks like an ascending wedge. I did sell and rebuy for 2% lower when we broke through the pink line yesterday. We've come back down again now though so will hold for now and see how the market reacts here.

Note

There's the bounce from the $6800 region. A good sign would be if it can break above the two resistances and get above 7k again.

Note

So it couldn't get above the 2nd resistance. Two rejections from it so far. If it can't break it today then it might be time to start considering that we're close to the top of the current run.

Note

I've taken some profit here. Half in cash now. There has been hidden selling pressure in the last few days. Shorts have been closed steadily yet the price hasn't been able to go up.

Note

Bitfinex was offline for an hour a bit earlier and that very minute it went offline, Bitmex tried to pump the price. They succeeded somewhat. However I don't think we will go up much more from here now. We're up against resistance again and buy volume is not coming in steadily. I think there's more chance of dropping to as far as $6500 soon.

Note

It went up a little but more but there is resistance at $7200. This happens to also be the 0.5 fib retracement. It's important not to chase the price. Better to take profit whilst ahead instead of reacting to a dump and getting out in a worse position. I'm full in cash now and will wait and see how things play out here.

It's pretty easy to fall from the setup we have now. We're at resistance and there was weakness shown just over a day ago when we dropped to $6800. It's easy to forget these things when the price pumps.

BTC_SA

Disclaimer

The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.