Bitcoin's recent volatility has not changed a bearish bias
So far Bitcoin has had a good couple of days and I see lots of people in real life as well online starting to get bullish and looking at putting on some big bets and so far I don't see the justification for that enthusiasm. I will link some ideas that make the macro bearish case to keep this post from ballooning even more.
Analysis
The bollinger bands can help determine trend merely by how they are angled... up, sideways or downward. You can also see "expansive" moves when the bollinger bands widen and you can see if it has been a really long time since the bottom of the bollinger band has been tested or if the top of the bollinger band has not been tested in a long time. Also, the daily VSTOP very close to the top of the daily BB. I suspect of volatility traders will be expecting the move to end here.
The first thing that BTCUSD will have to do before I start to change my bearish bias is start to move the daily BB sideways and then start to get it to move upward. That process can take months so I don't feel I am missing out of I don't rush to put a trade on in the next couple of days. Again, there is is also a very real chance that price action gets ripped to shreds at the top of the daily BB and VSTOP.
To be fair, the markets could potentially display a lot of upside potential. Here is the 3 day chart with both the standard and crypto ichi-moku cloud settings. The T-K displayed are for the crypto cloud and the high points are summarized on the chart. There are a lot of powerful moves in both directions when we are in the previous two black boxes but the ultimately we saw a bearish breakdown. It is just a very low probability scenario in my opinion.
s3.tradingview.com/snapshots/e/eLL9njFu.png
My Trade Set Up thought Process
As it stands on the 12 hour (and below) the RSI is already divergence to price action with hidden bearish divergence. Taking a short at or about the top of the daily BB would be a very technical move as the BB charts potential support and resistance and when it appears resistance or support is being met it can be evaluated with indicators.
To try and limit any losses I am going to be waiting for a red shadowless Heikin Ashi candle on the 12 hour on BTC or other crypto to put my short order on. Target setting will be based on the idea BTC is in a head and shoulders. That means I am prepared to short this right shoulder to past the neckline but will be on guard for a return move to the neckline and then another rejection. If I don't get the red candle I want I wait. I can literally just evaluate the charts ever 12 hours for a couple of minutes while I check the list of coins I want to put my shorts on unless I am looking to write an idea. The linked ideas show how I set the macro trend and why I am using a low time frame (daily BB and 12h candles) to set my entry. If you review the watchlist from the main chart I am still on #1 of the watchlist. Which means I personally have a long way to go before I personally start to take longs or move out of stable coins. Rather than buying dips and selling into strength I am looking to short the rip.
Linked Ideas summary
The first three ideas are my system for confirming market bias using the Volatility Stop on multiple time frames in conjunction with some other simple and fundamental technical analysis. The VSTOP is based of a measure of volatility, the Average True Range. If you read all three you will see plenty of re-iterations of the same concept but you should understand why by bias is so bearish. The last idea is where I think we will see a major stall in downtrend and potential reversal.
Analysis
The bollinger bands can help determine trend merely by how they are angled... up, sideways or downward. You can also see "expansive" moves when the bollinger bands widen and you can see if it has been a really long time since the bottom of the bollinger band has been tested or if the top of the bollinger band has not been tested in a long time. Also, the daily VSTOP very close to the top of the daily BB. I suspect of volatility traders will be expecting the move to end here.
The first thing that BTCUSD will have to do before I start to change my bearish bias is start to move the daily BB sideways and then start to get it to move upward. That process can take months so I don't feel I am missing out of I don't rush to put a trade on in the next couple of days. Again, there is is also a very real chance that price action gets ripped to shreds at the top of the daily BB and VSTOP.
To be fair, the markets could potentially display a lot of upside potential. Here is the 3 day chart with both the standard and crypto ichi-moku cloud settings. The T-K displayed are for the crypto cloud and the high points are summarized on the chart. There are a lot of powerful moves in both directions when we are in the previous two black boxes but the ultimately we saw a bearish breakdown. It is just a very low probability scenario in my opinion.
s3.tradingview.com/snapshots/e/eLL9njFu.png
My Trade Set Up thought Process
As it stands on the 12 hour (and below) the RSI is already divergence to price action with hidden bearish divergence. Taking a short at or about the top of the daily BB would be a very technical move as the BB charts potential support and resistance and when it appears resistance or support is being met it can be evaluated with indicators.
To try and limit any losses I am going to be waiting for a red shadowless Heikin Ashi candle on the 12 hour on BTC or other crypto to put my short order on. Target setting will be based on the idea BTC is in a head and shoulders. That means I am prepared to short this right shoulder to past the neckline but will be on guard for a return move to the neckline and then another rejection. If I don't get the red candle I want I wait. I can literally just evaluate the charts ever 12 hours for a couple of minutes while I check the list of coins I want to put my shorts on unless I am looking to write an idea. The linked ideas show how I set the macro trend and why I am using a low time frame (daily BB and 12h candles) to set my entry. If you review the watchlist from the main chart I am still on #1 of the watchlist. Which means I personally have a long way to go before I personally start to take longs or move out of stable coins. Rather than buying dips and selling into strength I am looking to short the rip.
Linked Ideas summary
The first three ideas are my system for confirming market bias using the Volatility Stop on multiple time frames in conjunction with some other simple and fundamental technical analysis. The VSTOP is based of a measure of volatility, the Average True Range. If you read all three you will see plenty of re-iterations of the same concept but you should understand why by bias is so bearish. The last idea is where I think we will see a major stall in downtrend and potential reversal.
Related publications
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.