Bitcoin - One More Upside Move Before Breaking Down To New Lows?
Updated
First off, I want to start with saying trader's don't call bottoms. Anyone who is adamantly claiming bottoms is not a real trader in my opinion.
Trader's use edges, probability and win expectancy to make calculated decisions on their trading to stay profitable over the long run.
I would be very happy if it was the bottom and we went to the moon, but I want to urge caution when caution is due.
If you remember, I urged the same caution when Bitcoin was at $6400 before it dropped over 40%.
I remember looking at Trading View that morning and seeing 5-6 charts in the top 6 places that were all calling for $20,000-30,000 within a few months.
We are at a similar place again and I am seeing our moon overlords come out in full force calling bottoms.
To me, we are at a very odd place for bitcoin to make a good trade as we could see a breakout to the upside through resistance, but we are also sitting at strong resistance to try and take a long position.
Lower time frames are showing a possible bull break with a bullish flag formation as you can see on my posted chart. These typically have a 72% chance of breaking to the upside, giving us a short term bullish bias.
If we do break to the upside, we could see a potential target at $$4300 and $4500, which are the 1.618 and 2.618 targets for this ascending triangle. It is also resistance from the previous swing highs of this current price action for the past 3 months.
If you read my previous analysis, I am still long from the green box at the bottom of the descending wedge.
I have not taken a short position since early February as the R:R did not favor shorts, but they are starting to look good again as we enter overbought territories.
We are now at the top of a downtrend resistance and so I will start to take some low leverage shorts with a stop above the resistance.
This is just a hedge for my longs down below and will close quickly with a bull break.
In doing some analysis on the higher time frames, the macro structure is still showing incredibly bearish.
If you look at the weekly chart first, it is very clear that we are in a massive downtrend and this looks like a short pit stop to lower levels.
We are in a downtrend and we are forming a contracting triangle on the daily.
In a downtrending/bearish market, I usually expect those to break to the downside as probability favors the overall trend.
If this is in fact an ABC correction from the $6,000 level, then this could give us an ABCDE triangle pattern and break to the downside scenario like this:
This gives us a possible move to the 2450 level.
We are also seeing indecision on the 3 day chart that is showing a spinning top.
On the 3 day, we've got a spinning top showing again, indecision between buyers and sellers.
One big driver of a move like that is the massive number of shorts that have closed as well as the number of longs opening.
As you can see here, the longs and the shorts are starting to diverge and there is a rising triangle support forming on the RSI along with a double top bearish formation.
On both Bitfinex and Bitmex, we're seeing a large imbalance between leveraged positions with longs sitting at 60% and shorts sitting at 40%.
This could give us a long squeeze to the downside that lines up with the daily chart analysis.
We are also seeing a record number of ethereum longs open awaiting the anticipated Constantinople fork coming up within the week.
If we see a post Ethereum fork dump, I think that bitcoin will follow suit and take out a lot of these long positions.
So, this could mean that we could see the price moves happen mostly on spot exchanges (that don't have leverage)
Looking at price action on the daily, we can see that we are sitting at the 23.6% resistance as well as a strong supply order block that we've dumped from 3 times previous as well as formed strong resistance back in late December.
Bollinger Bands are also showing we are at resistance and we will typically see a pull back to at least the middle of the band.
We are also seeing a bearish divergence show up on the daily time frame for the RSI and price action, although it is small, it could give us a clue to what we're looking at.
We are at a decision point, which is a place I don't like to trade personally, especially not on leverage.
If you are planning on taking a long position, you can use a stop loss below the ascending triangle support with a take profit as given on the chart.
As you can see here, the order books being so thin it's easy to get liquidated on a higher leverage position within this trading range.
I'm still holding my long positions from lower where we caught the bottom of this move where the green box, but I am urging caution with alts and bitcoin until we see a break out.
It's important to calculate your R:R and right now the R:R does not favor a long position if you didn't catch an earlier entry.
If we break up, then you can buy the retest. If we break down, then make sure your stops are set in profit.
Remember, you're looking for an edge to make consistent profits over the long term, not gamble on a speculative move that is not clear.
Trader's use edges, probability and win expectancy to make calculated decisions on their trading to stay profitable over the long run.
I would be very happy if it was the bottom and we went to the moon, but I want to urge caution when caution is due.
If you remember, I urged the same caution when Bitcoin was at $6400 before it dropped over 40%.
I remember looking at Trading View that morning and seeing 5-6 charts in the top 6 places that were all calling for $20,000-30,000 within a few months.
We are at a similar place again and I am seeing our moon overlords come out in full force calling bottoms.
To me, we are at a very odd place for bitcoin to make a good trade as we could see a breakout to the upside through resistance, but we are also sitting at strong resistance to try and take a long position.
Lower time frames are showing a possible bull break with a bullish flag formation as you can see on my posted chart. These typically have a 72% chance of breaking to the upside, giving us a short term bullish bias.
If we do break to the upside, we could see a potential target at $$4300 and $4500, which are the 1.618 and 2.618 targets for this ascending triangle. It is also resistance from the previous swing highs of this current price action for the past 3 months.
If you read my previous analysis, I am still long from the green box at the bottom of the descending wedge.
I have not taken a short position since early February as the R:R did not favor shorts, but they are starting to look good again as we enter overbought territories.
We are now at the top of a downtrend resistance and so I will start to take some low leverage shorts with a stop above the resistance.
This is just a hedge for my longs down below and will close quickly with a bull break.
In doing some analysis on the higher time frames, the macro structure is still showing incredibly bearish.
If you look at the weekly chart first, it is very clear that we are in a massive downtrend and this looks like a short pit stop to lower levels.
We are in a downtrend and we are forming a contracting triangle on the daily.
In a downtrending/bearish market, I usually expect those to break to the downside as probability favors the overall trend.
If this is in fact an ABC correction from the $6,000 level, then this could give us an ABCDE triangle pattern and break to the downside scenario like this:
This gives us a possible move to the 2450 level.
We are also seeing indecision on the 3 day chart that is showing a spinning top.
On the 3 day, we've got a spinning top showing again, indecision between buyers and sellers.
One big driver of a move like that is the massive number of shorts that have closed as well as the number of longs opening.
As you can see here, the longs and the shorts are starting to diverge and there is a rising triangle support forming on the RSI along with a double top bearish formation.
On both Bitfinex and Bitmex, we're seeing a large imbalance between leveraged positions with longs sitting at 60% and shorts sitting at 40%.
This could give us a long squeeze to the downside that lines up with the daily chart analysis.
We are also seeing a record number of ethereum longs open awaiting the anticipated Constantinople fork coming up within the week.
If we see a post Ethereum fork dump, I think that bitcoin will follow suit and take out a lot of these long positions.
So, this could mean that we could see the price moves happen mostly on spot exchanges (that don't have leverage)
Looking at price action on the daily, we can see that we are sitting at the 23.6% resistance as well as a strong supply order block that we've dumped from 3 times previous as well as formed strong resistance back in late December.
Bollinger Bands are also showing we are at resistance and we will typically see a pull back to at least the middle of the band.
We are also seeing a bearish divergence show up on the daily time frame for the RSI and price action, although it is small, it could give us a clue to what we're looking at.
We are at a decision point, which is a place I don't like to trade personally, especially not on leverage.
If you are planning on taking a long position, you can use a stop loss below the ascending triangle support with a take profit as given on the chart.
As you can see here, the order books being so thin it's easy to get liquidated on a higher leverage position within this trading range.
I'm still holding my long positions from lower where we caught the bottom of this move where the green box, but I am urging caution with alts and bitcoin until we see a break out.
It's important to calculate your R:R and right now the R:R does not favor a long position if you didn't catch an earlier entry.
If we break up, then you can buy the retest. If we break down, then make sure your stops are set in profit.
Remember, you're looking for an edge to make consistent profits over the long term, not gamble on a speculative move that is not clear.
Note
About half an hour after my post, we had the bullish break to the upside.The only question is if we will break the Adam and even Neckline at $4300 for a continuation upwards to $5200 or will face a rejection and a slide back to the downside.
Note
Still looking for a push to the blue zone for target 1 from the ascending triangle bull break.Ultimate target may be the 200MA.
If you're not long, watch for a pull back to previous resistance turned support on the confluence of the uptrend diagonal and the previous downtrend resistance for a nice long entry buy.
Note
We didn't quite make it to the top target. I should have been looking at Bitmex for the top resistance. I was focusing on Bitfinex on this chart, but my stops were trailed in profit and I opened a few hedged shorts around $4100.
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