Short

BTC - Bullish bat pattern, last leg forming

Updated

Even though is seems BTC is back into the up trend channel (inside a new short term steeper up channel), it could be forming a bat pattern. If this is the case, expect a high in a few days time and a low well into the lower uptrend channel around the futures contracts settlement dates. The approximate levels are in the chart, it is just a "feeling" so can`t be very exact on those. Will update if the pattern confirms with a high and then a down channel.

Trade active

On the 4h chart we can see BTC broke out the up channel to the down side as well as the EMA 30. Based on the indicators which are entering oversold area, I expect a "coy" of the previous formation of H&S. If that is confirmed, and then it breaks the neckline to the down side, we might witness the said bat formation

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*copy

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So far it looks like we are on track. BTC formed what appears to be the right shoulder - one day earlier than expected - and now it should revert down to test the "neckline" around $1400. If this very important support level falls, then we might be on our way down to the lower levels.

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We are now at a very crucial point, the "battle" for the neckline. Another smaller H&S formation can be seen within the right shoulder, on the hourly chart, so it should be now surprise if the major support level $13900 falls. Let`s see

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All right ... I`ve done some fine tuning of the chart based on the first three days of the "fall" and the pattern can be either a bat or even a Gartley 222. I tend to favor the later due to a long term trend near the end of the CD leg as well as due to the proximity of the 0.786 Fib level in the area. The level to watch in this case (for a completion of the pattern and a reversal to the upside) would be $8600

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On the 4 hour chart we can see a channel almost parallel with the longer term uptrend. The price bounced up from the lower level of the channel and most likely will test the 30 EMA for future action. Let`s see how this goes.

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As expected, 5 hours later we are within $50 range from the 30 EMA on the 4h chart. Let`s see what happens next

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Not even one hour later, the outcome is: EMA wins and pushes BTC price out of the up channel. Lets see where is the next stop

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The stop so far seems to be the 0.5 Fib level of $12700 which held a few times before and was also the last swing point. All bets are open: will it hold again or will it break?

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One day later, there seems to be a lot of indecision in the market. After the Korean FUD fiasco (again), the $12700 Fib level held but didn`t push the price too high (still under the 30 EMA). The candles might seem like a bear trap (red closed under the up channel but the green is back inside) and the indicators are all flattening out. So, we are still waiting for a decision: up or down (we are exactly mid range of our "bat" trade)

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Not even an hour after the previous update, BTC decided to try something: it is "fighting" for the 30 EMA on the 4 h chart and at the same level with the major Fib level of 0.382 (around $14300). If it closes above those levels, based on the next candle we will be entering the swing high inside the up channel. If it fails to break those two "hurdles" (EMA and Fib) then we will go again to test the $12700 level
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sorry about the typo, here is the "picture" as well:

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The "critical" 4h candle did close above the 30 EMA and we have two more candles since then: one red one green, meaning a consolidation. When looking at the 1 day chart, we can see why: BTC is preparing to challenge the daily 30 EMA at $14600. Same logic will apply here: close above, we go up otherwise we go down. We can also see another interesting pattern possible, H&S. Since BTC is all about H&S all over the charts, it wouldn`t surprise me to see the prices go up to the mid-level in the channel, and then back down again. Since the trade becomes risky, profits can be secured now, mid range. Good luck

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The 4 h 30 EMA is a too hard nut to break for the moment, so the price went down again. Still needs to punch through the Fib level / neckline at $12700 in order to complete the bat pattern. For now, we are in range trading.

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We have an interesting development on the BTC "front". Obviously the short term up channel is invalidated now after a second breach so I removed it from the chart. However, it seems we are forming a triangle since the 4h chart shows a slightly higher low. If this is the case, we can monitor the two possible outcomes, the initial bat formation and the right shoulder. Of course they exclude each other due to the time frame (they should be forming about the same time, which obviously is impossible. I believe that the key to the outcome stays in the 0.5 Fin level at $14300 and the 30 EMA on the 4h chart. Let`s see what next :)

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Small correction, $14300 is the 0.382 Fib level, not the 0.5

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As expected, the 30 EMA on the 4h chart (with the help of the 30 EMA daily) stayed as a "too hard nut to break"; we can see a classic bull trap there and now we have a retrace to the triangle lower wedge. We should see a break to the down side to have the bat pattern still in play

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Amazing ... we went as low as $11200, almost touching the upper line of the long term up trend channel and our upper "expected" levels around $10000. Now it is just a question about what to be ... a perfect Gartley (price reaches $8600) or we will stop here as a "limp" bat. Interesting to see

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For the moment we can expect a normal retrace up to around $13000, to catch up with the 30 EMAs on the 4h and 1h charts (which are way behind meaning oversold for the moment) and then we can take it from there

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On the hourly chart we can see a pennant forming, while waiting for the EMAs to catch up. It might break to the upside for a little while (based on a-b-c-d-e count) to test the $12700 level again and then might continue the bigger down movement

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The pennant broke directly to the downside, after an a-b-c only "consolidation" phase and it touched again $11149 level. This is very close to the Fib Level of $11085 and it seems to have formed a double bottom for the moment (1h chart). Let`s see what happens next

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Within the hour, we reach the upper channel line of the long term uptrend at exactly $10750. Here lies the final "battle"; we can stop here or we can try to push for the $8600 expected Gartley leg end. Feel free to take profits now, since we are close to the end of the line.

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Here is how our trade looks like after exactly 10 days from posting the original idea. The price touched the upper level of the expected target area at $10161. I am not closing it yet because I am curious to see if it will form a perfect Gartley at $8600 or if we found the bottom already and we enter a consolidation period. Thank you for following and liking the idea

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Just as a note to myself, both LTC and XRP reached perfectly the 0.786 Fib level already, from where they bounced back up once BTC started to rise a little. Let`s see if BTC will reach it as well, that would be at $8700 - very close to the closing of a perfect Gartley (as I am expecting it to do)

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Just for education purposes only, we can see a perfect bull trap on the 4h charts just before the selloff:

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The price reached a low of $9222 today. Day is still not over, even if now it seems we are "recovering" for a while. One more push, and we will reach our target. Let`s see if this happens or we reached the end of the line already.

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Interesting to watch; the selloff reached the bottom 5 hours before settlement time and was on a bullish retrace since. Let`s see what happens right after 4 PM ET when the chart shows a strong resistance. I expect a fast sell to reach again the bottom levels and to form either a double bottom or even to reach our target of $8600.

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Settlement price based on the Gemini Exchange auction at 4 PM ET:
Date: Time: Pair: Volume: Total value USD: Price:
01/17/2018 7pm -02 BTCUSD 616.8598 ~6.72M $10,900.00

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This is where we are now, half a day latter: on the 4h chart the price is catching up with 30 EMA, trading sideways (slightly bullish). We are above the Fib level $11085 and the upper limit of the uptrend channel, so I am expecting a retest of those levels once EMA is tested as resistance (in a few hours). Let`s see what happens next

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Finally 30 EMA of the 4h charts caught up with the price after forming a nice a-b-c 3 waves correction up trend. I think we are going down again but let`s see where to

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I will take a wild guess now and try to predict the next two days. It is just an educated guess based on what I`ve seen so far and the indicators do allow for such a development.
My two cents is that today the 19th we will have the last day of the correction (I am working with day close at 00.00 UTC / GMT time). This should play out with a full bear candle closing around the $8600 level followed the next day by another full bull candle. This would also complete a 5 waves down trend. Very curious to see if my "crystal ball" works magic :)

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Here is where we are so far during the day: on the 4 h chart we are testing again the 30 EMA, suggesting a double top. On the 1h chart, we can see in more detail plus if we look at the indicators we can see they are favoring a down movement (MACD goes down, RSI formed a H&S like the price itself and the volume is falling - no more buying power).

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I am neither a bear nor a bull when it comes to an asset, I am just observing the possible formations. In this particular case, if the price doesn`t complete the 5 waves count down to $8600 (and the Gartley at the same time) within today / tomorrow time frame and it keeps lingering around those levels we are now at, I am afraid we will be looking at another major dip towards $7000-ish levels during the next week or so.

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Ok, so it seems my "crystal ball" for today wasn`t working that well ... we had another flat day, continuing the flat / range channel just around the 30 EMA hourly. Unfortunately this flat trading decreases the chances to have the fall stop at the "perfect" level of $8600 and to form a reversal there, as the bat / Gartley should have proved. Instead, the chances are growing to continue the 12345 Elliot Wave count down to the next up-trend channel, with a "peak" anywhere around $7400-$7000. Let`s see what happens during the next few days

Trade closed manually

I am closing this trade now, since we are out of formation already due to the time frame. It seems the correct formation was the initial bat, as announced on the 6th of January with the last leg end at $9222. Congratulations to all who followed along from top to bottom, nice profits: $17234 - $9222 = $8012 or 46%
I will follow BTC price on another idea. Thank you for your comments, likes and support

Haceru

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