DIGITAL ALPHA UPDATE - BTC "Double Three" Scenario
Updated
Hello everyone and happy weekend!
DA Bull here giving you guys a quick scenario to think of as we start zoning in on 6k once again. Most folks following TA here on Tradingview realize that 6k is a major support. Most folks have gone super bearish since that ascending wedge drop from $7400. If you have been following our "Time for Tea" write-up, the drop would not have surprised you one bit. (You can check it out below where we are still publishing updates.) Here at Digital Alpha we have been long-term bullish (1 year), mid-term bearish (1 month), and short -term bearish/sideways (1 week). We might be flipping the mid-term and short-term soon, but as of now we are waiting to see the next move - likely a test near the 6k region. If we go up from here there's a good chance for $6600 (even $6900!), which will still keep our models all valid.
The "Double Three" is the chart today. This is an WXY elliot wave pattern that ends with an ABCDE triangle for the "Y" portion. During the last run BTC had, this was the pattern that existed. However, we then had some sideways movement after the ABCDE breakout. The sideways movement can lead to the "X" and "Z" we have question marks next to. We leave that possibility wide open. If we see a WXYXZ then that would be a "Triple Three". Without getting too technical and creating confusion, the take home message is this might be a bottom coming up. The price movement after the bottom does not lead to a paraBULLic run, so no need to go crazy yet. Good entries is the name of the game here.
I say good entries because risk/reward is something to consider. If 6k is the bottom and you start entering near 6k, then you have obviously gotten a great entry for the next run - AND this is something we can safely expect. If 5.5k occurs (we have been looking at 5.5k near Sept 20-24th for several months now - again read "Time for Tea") then your 6k entry still looks great. Sure you can try to catch the wick, but you might miss the quick rebound. Even more bearish scenarios exist of 4.5k and lower, but in the next run will you kick yourself for entering at 6k? No. You might kick yourself for entering above 10k though! Keep in mind that going to 4.5k and lower during a fast selloff will most likely last just a few hours. The major wick that pierced 6k in early 2018 only lasted a few hours. Were you asleep? Were you out to dinner? Were you at work in a meeting? Did you have access to your trading platform!? Try to realize that the chance for you to make a trade during that time frame was small. Now, what happened afterwards? Very fast price rise.
Moral to the story, consider what an entry at these levels will mean several months from now. Don't try to be the guy that catches the knife at the perfect moment. Additionally, don't short the bottom! The risk/reward for shorting at 6k is not in your favor. The risk/reward for shorting at 7k and higher was in your favor. The risk/reward for placing a long near 6k AFTER we dip below IS in your favor. Keep this in mind over the next week or two. (Note, I'm saying IF you place a long around 6k to wait until after a fast selloff/dip.)
Now, go have a beer, sweet tea, shandy, cigar, tequila, fosters, or whatever your summertime preference is because summer is ending, enjoy what is left of it!
- DA Bear (wondering if my horns are starting to emerge...)
p.s. - A 5% failure on the ABCDE would still make the triangle valid and place us near 5.5k.
DA Bull here giving you guys a quick scenario to think of as we start zoning in on 6k once again. Most folks following TA here on Tradingview realize that 6k is a major support. Most folks have gone super bearish since that ascending wedge drop from $7400. If you have been following our "Time for Tea" write-up, the drop would not have surprised you one bit. (You can check it out below where we are still publishing updates.) Here at Digital Alpha we have been long-term bullish (1 year), mid-term bearish (1 month), and short -term bearish/sideways (1 week). We might be flipping the mid-term and short-term soon, but as of now we are waiting to see the next move - likely a test near the 6k region. If we go up from here there's a good chance for $6600 (even $6900!), which will still keep our models all valid.
The "Double Three" is the chart today. This is an WXY elliot wave pattern that ends with an ABCDE triangle for the "Y" portion. During the last run BTC had, this was the pattern that existed. However, we then had some sideways movement after the ABCDE breakout. The sideways movement can lead to the "X" and "Z" we have question marks next to. We leave that possibility wide open. If we see a WXYXZ then that would be a "Triple Three". Without getting too technical and creating confusion, the take home message is this might be a bottom coming up. The price movement after the bottom does not lead to a paraBULLic run, so no need to go crazy yet. Good entries is the name of the game here.
I say good entries because risk/reward is something to consider. If 6k is the bottom and you start entering near 6k, then you have obviously gotten a great entry for the next run - AND this is something we can safely expect. If 5.5k occurs (we have been looking at 5.5k near Sept 20-24th for several months now - again read "Time for Tea") then your 6k entry still looks great. Sure you can try to catch the wick, but you might miss the quick rebound. Even more bearish scenarios exist of 4.5k and lower, but in the next run will you kick yourself for entering at 6k? No. You might kick yourself for entering above 10k though! Keep in mind that going to 4.5k and lower during a fast selloff will most likely last just a few hours. The major wick that pierced 6k in early 2018 only lasted a few hours. Were you asleep? Were you out to dinner? Were you at work in a meeting? Did you have access to your trading platform!? Try to realize that the chance for you to make a trade during that time frame was small. Now, what happened afterwards? Very fast price rise.
Moral to the story, consider what an entry at these levels will mean several months from now. Don't try to be the guy that catches the knife at the perfect moment. Additionally, don't short the bottom! The risk/reward for shorting at 6k is not in your favor. The risk/reward for shorting at 7k and higher was in your favor. The risk/reward for placing a long near 6k AFTER we dip below IS in your favor. Keep this in mind over the next week or two. (Note, I'm saying IF you place a long around 6k to wait until after a fast selloff/dip.)
Now, go have a beer, sweet tea, shandy, cigar, tequila, fosters, or whatever your summertime preference is because summer is ending, enjoy what is left of it!
- DA Bear (wondering if my horns are starting to emerge...)
p.s. - A 5% failure on the ABCDE would still make the triangle valid and place us near 5.5k.
Note
Why I discuss entry, consider this:
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