Bitcoin - The Contradiction
Updated
Hello, Mollusc Mike here back with a new overview of Bitcoin
Something that has troubled me for some time is the following contradictory views;
A: Crypto is pushed to extremes in both directions by speculation via inexperienced investors who aren't versed in TA, or who simply ignore it.
B: Our trendlines and retrace targets are to be built using the peak price reached, treating this data as if we are in a traditional stock market driven by experienced investment groups.
So which is it? We see exact targets trotted out stating we will reverse at '$4,988.56' whilst at the same time lamenting emotional markets full of individuals buying the top and selling the bottom, for this reason I take issue with our ATH price, reached in what seems a long time ago now at the peak of a buying frenzy. We can see now of course that the 'smart money' as usual sold their bags to the public eager to buy the top pushing us further than I argue we should have gone.
A possible solution to this problem is to use Heikin-Ashi candles to get a clearer view of this background noise and exactly where we are drawing out extreme highs and lows and how this affects our re-trace targets since we are now looking at a more average ranged pattern, the above trend line starts from the peak daily close price.
My narrative is still that we have ended this phase of the correction proper, we are now accumulating and cruising sideways. That is not to say we will not fluctuate downwards or we will not have brief rallys up in the coming days, but overall we can see exaustion on all fronts and this is exactly what we want be seeing to signal a new phase of the market.
Let's take a look at some signals;
Weekly
Our RSI is low and for the moment flatlining showing very little momentum, this is important following our brief rally upwards on Sunday, yes we came crashing right back down, but even with this downwards push the price has been completely stalled back in the $6,600 area once again raising questions whether any target under 6k can hope to be met in the short term.
SMI is oversold to high hell, I don't think I need to say much here but we do not have much room to push further without some serious pressure.
MACD has diverged and looking very bottomed out, I think we will see this flatten by the time our next weekly bar is printed.
Daily
The daily is very interesting, we have an RSI that since the start of the month has been making subtle higher highs and higher lows
The SMI is presently continuing it's journey upwards into bullish territory whilst our MACD has made a bullish cross, although with little conviction.
My personal prediction for the rest of this week is to stay in the range of $6,500 - $7,200 range but with an overall view of grinding our way sideways with a bias for the upside, I am still not seeing the space for a large move downwards.
Longer term by next week we can look to see a revival movement upwards taking us into a spring uptrend, how far this will last is difficult to say at this moment, as we will no doubt see the usual large correction following this as we have in previous years once the current oversold pressure is relieved.
Many of the popular TA folk have been straining and backtracking trying to pinpoint the letter of the alphabet correction wave or various invalidated Elliott waves we are or aren't on and you have probably seen how well that is going... I won't be giving buying or selling targets for now as that is down to your own strategy, I am simply conveying my interpretation of the overall picture and which way I believe we are heading in the coming weeks. The market will most often laugh in your face when you start drawing precise lines it is meant to follow.
As always thank you for reading as I hope to provide a rational view of the events unfolding.
Something that has troubled me for some time is the following contradictory views;
A: Crypto is pushed to extremes in both directions by speculation via inexperienced investors who aren't versed in TA, or who simply ignore it.
B: Our trendlines and retrace targets are to be built using the peak price reached, treating this data as if we are in a traditional stock market driven by experienced investment groups.
So which is it? We see exact targets trotted out stating we will reverse at '$4,988.56' whilst at the same time lamenting emotional markets full of individuals buying the top and selling the bottom, for this reason I take issue with our ATH price, reached in what seems a long time ago now at the peak of a buying frenzy. We can see now of course that the 'smart money' as usual sold their bags to the public eager to buy the top pushing us further than I argue we should have gone.
A possible solution to this problem is to use Heikin-Ashi candles to get a clearer view of this background noise and exactly where we are drawing out extreme highs and lows and how this affects our re-trace targets since we are now looking at a more average ranged pattern, the above trend line starts from the peak daily close price.
My narrative is still that we have ended this phase of the correction proper, we are now accumulating and cruising sideways. That is not to say we will not fluctuate downwards or we will not have brief rallys up in the coming days, but overall we can see exaustion on all fronts and this is exactly what we want be seeing to signal a new phase of the market.
Let's take a look at some signals;
Weekly
Our RSI is low and for the moment flatlining showing very little momentum, this is important following our brief rally upwards on Sunday, yes we came crashing right back down, but even with this downwards push the price has been completely stalled back in the $6,600 area once again raising questions whether any target under 6k can hope to be met in the short term.
SMI is oversold to high hell, I don't think I need to say much here but we do not have much room to push further without some serious pressure.
MACD has diverged and looking very bottomed out, I think we will see this flatten by the time our next weekly bar is printed.
Daily
The daily is very interesting, we have an RSI that since the start of the month has been making subtle higher highs and higher lows
The SMI is presently continuing it's journey upwards into bullish territory whilst our MACD has made a bullish cross, although with little conviction.
My personal prediction for the rest of this week is to stay in the range of $6,500 - $7,200 range but with an overall view of grinding our way sideways with a bias for the upside, I am still not seeing the space for a large move downwards.
Longer term by next week we can look to see a revival movement upwards taking us into a spring uptrend, how far this will last is difficult to say at this moment, as we will no doubt see the usual large correction following this as we have in previous years once the current oversold pressure is relieved.
Many of the popular TA folk have been straining and backtracking trying to pinpoint the letter of the alphabet correction wave or various invalidated Elliott waves we are or aren't on and you have probably seen how well that is going... I won't be giving buying or selling targets for now as that is down to your own strategy, I am simply conveying my interpretation of the overall picture and which way I believe we are heading in the coming weeks. The market will most often laugh in your face when you start drawing precise lines it is meant to follow.
As always thank you for reading as I hope to provide a rational view of the events unfolding.
Note
Nice time for an update I think We had a drop overnight and stayed nicely in the middle of our range, once again words like 'free fall' are being used but i'm struggling to view the retrace in this way due to how quickly it was caught, a lot of catious profit taking is happening each time we run out of steam and that's fine.
If we look at this from everyone's favourite child, the 4H view, we can see the SMI is heading down from being overbought and the overall picture is a bearish move. However, once again the short burst of downwards momentum as reflected in the RSI was halted in it's tracks and we are clawing our way back up as I write this.
When we zoom out to the daily view we are seeing a similar picture of very little momentum, as of course the daily is a lagging indicator, whilst we still have our weak bullish cross on the MACD we can expect this to flatten in the coming day or 2.
However, as always we need to asks ourselves how much space there is for a big dramatic fall? In my view, not a whole lot and this is supported firmly by the weekly view.
So my forecast remains unchanged, a dip down toward $6,500 in the 3 days currenty seems more likely than it is not, but overall we are rangebound and grinding sideways since breaking $7,200 would also be an equally difficult task for now.
My parting thought is simply to be wary of flags, bearish or bullish. I do not dwell on these at our current point due to the large amounts of accumulation driven by unreasonably large sell and buy orders that can be seen on the books, I intend to do a more in depth look into this and it's effects soon.
If you think of a chart as a painting, always wonder who's holding the brush.
Cheers for reading
Note
The kids were messing around in the back seats and Bitcoin, following a bad nights sleep and a stressful few months at work, finally snapped and is turning the damn car around.The next 4 hours will be very interesting indeed - for now, be cautious of the retrace
Note
I forgot to add to the above that of course a daily candle close above $7,800 would be beyond significant using my adjusted trendline above on the Helkin-Ashi candle. In the event of this it will likely indicate the spring uptrend I mentioned above has sprung a week earlier than expected, but for now caution is the order of the day.
Note
Well this has been a very interesting 24 hours indeed As mentioned above the level on my chart at $7,800 using our adjustred trendline was important to hold above and we are so far holding it well.
A retrace is looking likely, in an ideal world I would like to see a drop down to near $7,650 to keep just above our triangle, in the event of this I will be posting a new idea as for me this would indicate we are moving to the next phase.
So let's take an overview of some signals;
The daily chart is looking good, the RSI in the mid 50s is holding momentum upwards and leaving us plenty of room
SMI is a difficult indicator to read too much from in it's currently place, we are overbought and looking like a retrace is needed to take us higher, here we have potential to take a turn for the worse if we lost momentum.
MACD is the best break we've seen since the nice little rally we had in Feb, but what is really giving me some enthusiasm is the weekly chart!
The frustration I felt in February was being told that this could be the reversal because the daily looked great, but the weekly looked horrible.
This is a bit different, the weekly view as i've covered above, is looking in a much better place indeed which gives us some optimism around the corner.
Once again it's a waiting game to see if we can find a footing for a nice spring rally taking us into May.
I see a lot of posts sticking to their under 5k predictions, whilst I concede that following a good movement up we may well then have the space to take a harsh correction perhaps closer to June, as things presently look I am struggling to see support for this target in the very short term.
I'm not a believer of anyone religously sticking to strict targets as I feel it's too easy to become emotionally attached to your analysis as if it were a biblical prophecy, always be open to re-assesment in the short to medium term even if you believe you so strongly believe you will be vindicated in the long term.
Thanks as always
Trade closed manually
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