Bitcoin - The 'something is bothering me' analysis
Updated
Hello it is Musty Mike back with a take on Bitcoin
So Bitcoin has been making some interesting moves as of late, causing doubt on any bullish analysis and has left anyone who predicted a downwards move to become more overconfident than ever, regardless of your outlook these are signifcant events we are seeing unfold in this correction.
We seem to have reached a chicken and egg situation whereby we are looking for bullish volume before a bullish move has taken place, this doesn't mean that interest in Bitcoin is dead, it's simply a case of jumping the gun and expecting all of the signs of positive price action to occur prior to the movement itself, it's like trying to diagnose an illness before the patient has caught it.
So first things first you will notice i've marked some points of interest on the chart above, this is the interaction of Bitcoin with the cloud on the weekly, this is a reflection of our larger trend and I find it an impossible point to argue that we are simply going to break through this in the coming week. Next you can see our 3 main resistances and how these also line up with our cloud, in particular there is an interesting trendline running to the $5,221 resistance which i personally believe will be our bottom capitulation wick.
The final thing I will note on the cloud is the twist lining up perfectly with the end of December -
I will be building up this idea in stages so as to start of as a general overview before building up a more complete picture and price points, as I am typing this we are currently seeing a bounce that is needed to let off some pressure, this will not hold up for long but we are very close to the next real upwards movement. I do smile at how quickly we have forgotten what kind of price movements Bitcoin is capable of, but I am sure we will see a refresher soon.
So Bitcoin has been making some interesting moves as of late, causing doubt on any bullish analysis and has left anyone who predicted a downwards move to become more overconfident than ever, regardless of your outlook these are signifcant events we are seeing unfold in this correction.
We seem to have reached a chicken and egg situation whereby we are looking for bullish volume before a bullish move has taken place, this doesn't mean that interest in Bitcoin is dead, it's simply a case of jumping the gun and expecting all of the signs of positive price action to occur prior to the movement itself, it's like trying to diagnose an illness before the patient has caught it.
So first things first you will notice i've marked some points of interest on the chart above, this is the interaction of Bitcoin with the cloud on the weekly, this is a reflection of our larger trend and I find it an impossible point to argue that we are simply going to break through this in the coming week. Next you can see our 3 main resistances and how these also line up with our cloud, in particular there is an interesting trendline running to the $5,221 resistance which i personally believe will be our bottom capitulation wick.
The final thing I will note on the cloud is the twist lining up perfectly with the end of December -
I will be building up this idea in stages so as to start of as a general overview before building up a more complete picture and price points, as I am typing this we are currently seeing a bounce that is needed to let off some pressure, this will not hold up for long but we are very close to the next real upwards movement. I do smile at how quickly we have forgotten what kind of price movements Bitcoin is capable of, but I am sure we will see a refresher soon.
Note
Part B: Projected path I have been mulling things over all day and I have arrived at a bold prediction, this fits a number a narratives very well. Whilst I am the first to point out how Bitcoin will laugh at the lines we draw, however I feel compelled to put this idea forward.
The first point I would like to make is that there is a very strong feeling that we will test $7,800 before immidiately turning back to the extreme downside, indeed this is reflected in the rising shorts. But I am not satisifed with 2 things:
a.) I am not convinced shorting has reached fever pitch as we have seen before, we are nearly there, but I feel a surprisingly strong bounce at around $6,544.
b.) Whether it fails and falls back again or not, I refuse to accept that as we approach the cloud on the weekly chart we will not see a significant bounce, to do this we need a sharp capitulation to encourage money currently sidelined to re-enter the market.
This is of course speculative, but it is currently a nice fit in my mind both within indicators as well as the fundamental unpredicatability of the market. I will update as events unfold
Note
Something is bothering me today about this drop, specifically the lack of follow through volume in ANY direction. Here's a screen shot of today; (pardon the trend lines)
And here is a screen shot of our last decent reversal in April;
There's some similarities to note in terms of volume and apparent lack of conviction, now I could be wrong and we are about to see a huge dump again, I cannot rule anything out. But there is something about this price action that makes me uneasy so if you're shorting this move I advise a tight or trailing stop.
Note
Pardon, it might be more useful if the second chart was zoomed in to a similar degree... Note
Wow this isn't looking good at all... As a couple of people pointed out, the anemic volume we saw yesterday is pointing towards the forming of a right shoulder, our resistances seem to support this too-
Again, pardon all the lines on the chart below but each one is important in it's own right. We can see a couple of strong resistance lines between us and invalidation of the right shoulder, also the target of head & Shoulder takes us to just below 6k, a perfect reversal zone!
Note
Also just to remind to await confirmation of this pattern, remember how drawn out the shoulder of our last drop was! I expect a fake drop first to scare some shortsNote
Broken out of consolidation triangle, lets see what happens next 1st target is $6,540 then we look for weakness
Note
2 things of interest - We fell and the neckline just held by the skin of it's teeth, this idea is still in place
As you may be aware, Bitcoin shorts went parabolic recently and crashed hard in the last few hours, also the chart has painted a pennant suggesting further closing of short positions could be imminant!
This is a time to sit and wait for the right moment to take a position but a short squeeze seems likely, potentially up to our target
Note
Short squeeze as predictedNow this will be an absolute frankenstein's monster of a head and shoulders if it comes off... but stranger things have happened
Trade active
Weak follow through volume so far, could this be the sign of weakness we are looking for :) A tight stop loss is best about $7,560 based on Bitstamp pricing
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So i'm going to share my rather bold prediction for the next move Now be nice to my deformed head and shoulders, i'm realise now that it is most likely the completion of a cypher pattern but I really cannot be bothered to re-draw this as the cut and dry of the matter is the outcome is the same.
This might seem crazy, but lets just remember that regardless of whether we resume a downtrend after this move, I am unsure on this. However, as mentioned above are approaching the cloud on the weekly and even in 2014 we didn't slice through this like butter so I cannot find one good reason why this is going to happen now... and that is on a technical view before we even bring fundamentals into this.
Note
This low volume price action is painful to watch, just dithering around like an old lady with a bad hip.Note
Sadly our stop got touched, these low volume pops followed by no follow through in any direction are maddening For the moment we take stock of the wider picture and see how this plays so as to take a level headed approach
Note
I'm finding messsages in Bitcoin's RSI Trade closed manually
Had a few thoughts occur to me just now so i'm going to put them in a new idea. This market is a real tricky thing to navigate at the moment and you need to be ready to adjust your ideas as things develop
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