Will the BTC Breakout Stick? Or is it Just a Wick?
Updated
Follow up my previous post where I posed the question did the BTC uptrend break in 2022.
I'd like to clarify points on common misconceptions that came up in the comments of the last post. If you'd like to just read current analysis skip to the line break.
I'm Agnostic on BTC
It's assumed bear thesis' on BTC are always linked with negative opinions of it. I'm entirely indifferent. It can be the next world reserve currency or digital beanie babies. If it's going to boom and boom I'll buy the breakouts and retests. I've no underlying desire for BTC to go down. If it goes up we all make easy money. What's not to like?
I am a trader and I'm indifferent to everything I trade. I've no more personal bias towards BTCUSD than I do EURUSD. I am just discussing trend structures.
I'm Bearish on BTC in Only Certain Zones
There are certain points in which there's highest risk for an uptrend failing and offer the best chances for bears. People tell me how bears have been wrong from the low but I wasn't "Them". I'm wrong in predefined zones. I got long BTC very early in the reversal. Tried to short 30 -35K. Didn't like it. Got out. Bought the retest of 40K up to 55K.
Started shorting at 55K. Haven't been liking it too much but I think the case to persist remains for now (More on that in the analysis section). I've not been a bear at every price point and I'm not going to be a bear at every conceivable point in the future. This is a mindset projected onto bears by bulls because this is the mindset bulls have related to BTC. One opinion.
I Have Bull Plans
I can post some real bull porn stuff, but haven't you seen it? Lots of people are doing the different cycle expansions and wave counts. If we breakout it's going to be a huge move. We can plan for that when we're outside of the bear risk zone. Failure of strong bear zones I consider to be extremely bullish in most instances.
Here's a bear porn. In the first post I said for the first time ever the new high after a crash event did not extend. This is, objectively, a change in the pattern of BTC trading. I have a counter thesis to that. All it takes is to find an example of something like this in a big uptrend.
I can do that. Here's DJI's swings around the crash years.
Would imply an absolute glory fest to come. I'm down with that, if you'll excuse the pun.
But if this is going to happen it's going to be fairly easy to deal with using any type of bull strategy and go on for a long time. So what's the need to be tunnel visioned right now?
It makes sense to be cautious and plan for all outcomes in the risk zones.
BTC Ultimately Heading Higher Doesn't Annul the Thesis
This relates to the agnostic point. People equate me asking if the BTC trend failed to me saying I think BTC is going to fail. Isn't the case. I've no thoughts one way or the other. I do know, thought, that it's possible BTC could be in a 50 - 100 year uptrend and potentially completed the first huge trend leg of that.
BTC could be in some sort of "Super Cycle" and we might have just seen all of act one. A massive sustained crash over years is due to come before a spectacular boom 10 - 20 years down the line which makes the previous rally look tiny in context. This is possible even if there was a lot of adoption while this is going on.
The prime example is the Nasdaq. Nasdaq was totally going to be a thing but it had a devistating crash first. In hindsight, this could be said to have been the first major breakout and first full correction in the Nasdaq. Setting up the multiple decade uptrend. Another example would be the Roaring 20's being the breakout. Depression the correction.
(NB: Elliot modelled the EW on the Roaring 20's and Depression. Saying the depression was an ABC correction. In essence forecasting the massive trend that followed close to the low).
It could be that 2022 was the great shakeout year and we'd be about to head into the biggest trend leg now. I've no problem with that. I have a problem with ONLY THAT.
Other things can happen.
I Have No Problem with Crypto Bulls Making Money
I don't. I'm not one of those bears. I don't care. Just like to trade.
Not all people posting bearish analysis are you enemy. I'm just sharing my experience with trend structure. It's proven to be useful on more than one occasion.
====================================================================================================================================================================
First thing to say is when it comes to overall analysing of large trend structure, wicks can not be considered made breaks.
If we have big wicks on big charts going through big levels they don't really count. They count a lot for trading. Trading BTC certainly wasn't fun. For the question of has BTC made a valid breakout the answer would have to be "Not yet". It looks promising for one but if the huge swing up we had is rejected and eclipsed with no new high - it was just a trick.
So I don't think we can read too much into this other than to say there's a good chance whatever direction is picking over the coming days and weeks has high odds of being the overall direction for the foreseeable future.
It looked a lot like a break out coming. I got stopped out a lot of my shorts and the only reason I had any on in the drop was because I thought the indices sell off had legs and crypto might follow. That and ETH. Let's talk about ETH. I do not know all the correlations with BTC and ETH but what happened in ETH is very interesting.
ETH lagged BTC and while BTC was right at the very cusp of what seemed would be a run away break, ETH was hitting the 76. Classic bull trap level. I tried and failed with this trade in BTC but the tendency for bull traps to end here, BTC being at extreme limits of where failed spikes could form and indices looking bearish on 4 hour charts made me really interested in this.
Posted shorts on ETH near here.
That's a notable reaction.
The possibility of this type of move is what I was thinking when shorting BTC at the same level.
TA Odds Statistically Bull For BTC
As per the rules I use, if we break the 76/86 bulls have a 3/4 edge. 3/4 times it's going to go higher to at least a 1.27 extension (And this is often a breakout that will go further later).
The problem with probabilities is they can't be expected to be accurate on any one time event. So by these rules the odds favour the bulls but that's no more telling than a team being bookies odds in a sporting fixture. Doesn't ensure the future outcome.
Further to this is the tricky fact that if we're forecasting exceptional moves it's rational for these to be the times in which there's an increased odds of things not complying with what basic odds would predict.
So at this point I'd say based on BTC alone the odds favour the bulls but I'd think the implied bear move on failure of the up move would have a very high probability of being a really big move.
In the bull thesis a pullback to test the broken fibs is most likely and this is usually where I'd look to go long.
I don't plan to by default go long there this time. The confluence of risk off signals I find suspicious and if an overall turn in risk conditions was coming BTC doing this would be the ideal thing to fuel euphoria and make everyone overall bullish into the high. If that's what it turned out to be, it'd have been very good at it.
I'll be very careful if we get to supports. Trail my stops on shorts. But I'll wait and see if the supports can hold or break. A break could easily see a lot of the rally's gains taken quickly.
BTC looks and feels bullish now. But this is very early in the month.
If this turned out to be a wick and the month ended up closing down somewhere near the red line there'd be a very different outlook.
==================================================================================
If BTC breaks out there will usually be a little run and then a big retest.
Very bullish moves usually end up looking something like this.
Assorted bull forecasts are saying a breakout goes up here:
And I agree. Breakout could be extremely positive for BTC.
However, all of this momentum failing to actually produce any break save an extremely small period of time trading in what would be later viewed as a nominal wick if the market reversed would be a real reg flag for the possible trend failure.
If there was a trend failure on the weekly chart after this type of setup it'd be a really bad event. Even fitting it inside of the most bullish of analysis it would have the potential to produce a multiple year bear market.
A lot of people observe a 4 year cycle. But there can be little cycles inside of cycles. Another possibility is we're near the end of a 13 year cycle and due a correction that would not last less than multiple years. It would be, by a margin, the worst thing that's happened in BTC's trading history.
I'd like to clarify points on common misconceptions that came up in the comments of the last post. If you'd like to just read current analysis skip to the line break.
I'm Agnostic on BTC
It's assumed bear thesis' on BTC are always linked with negative opinions of it. I'm entirely indifferent. It can be the next world reserve currency or digital beanie babies. If it's going to boom and boom I'll buy the breakouts and retests. I've no underlying desire for BTC to go down. If it goes up we all make easy money. What's not to like?
I am a trader and I'm indifferent to everything I trade. I've no more personal bias towards BTCUSD than I do EURUSD. I am just discussing trend structures.
I'm Bearish on BTC in Only Certain Zones
There are certain points in which there's highest risk for an uptrend failing and offer the best chances for bears. People tell me how bears have been wrong from the low but I wasn't "Them". I'm wrong in predefined zones. I got long BTC very early in the reversal. Tried to short 30 -35K. Didn't like it. Got out. Bought the retest of 40K up to 55K.
Started shorting at 55K. Haven't been liking it too much but I think the case to persist remains for now (More on that in the analysis section). I've not been a bear at every price point and I'm not going to be a bear at every conceivable point in the future. This is a mindset projected onto bears by bulls because this is the mindset bulls have related to BTC. One opinion.
I Have Bull Plans
I can post some real bull porn stuff, but haven't you seen it? Lots of people are doing the different cycle expansions and wave counts. If we breakout it's going to be a huge move. We can plan for that when we're outside of the bear risk zone. Failure of strong bear zones I consider to be extremely bullish in most instances.
Here's a bear porn. In the first post I said for the first time ever the new high after a crash event did not extend. This is, objectively, a change in the pattern of BTC trading. I have a counter thesis to that. All it takes is to find an example of something like this in a big uptrend.
I can do that. Here's DJI's swings around the crash years.
Would imply an absolute glory fest to come. I'm down with that, if you'll excuse the pun.
But if this is going to happen it's going to be fairly easy to deal with using any type of bull strategy and go on for a long time. So what's the need to be tunnel visioned right now?
It makes sense to be cautious and plan for all outcomes in the risk zones.
BTC Ultimately Heading Higher Doesn't Annul the Thesis
This relates to the agnostic point. People equate me asking if the BTC trend failed to me saying I think BTC is going to fail. Isn't the case. I've no thoughts one way or the other. I do know, thought, that it's possible BTC could be in a 50 - 100 year uptrend and potentially completed the first huge trend leg of that.
BTC could be in some sort of "Super Cycle" and we might have just seen all of act one. A massive sustained crash over years is due to come before a spectacular boom 10 - 20 years down the line which makes the previous rally look tiny in context. This is possible even if there was a lot of adoption while this is going on.
The prime example is the Nasdaq. Nasdaq was totally going to be a thing but it had a devistating crash first. In hindsight, this could be said to have been the first major breakout and first full correction in the Nasdaq. Setting up the multiple decade uptrend. Another example would be the Roaring 20's being the breakout. Depression the correction.
(NB: Elliot modelled the EW on the Roaring 20's and Depression. Saying the depression was an ABC correction. In essence forecasting the massive trend that followed close to the low).
It could be that 2022 was the great shakeout year and we'd be about to head into the biggest trend leg now. I've no problem with that. I have a problem with ONLY THAT.
Other things can happen.
I Have No Problem with Crypto Bulls Making Money
I don't. I'm not one of those bears. I don't care. Just like to trade.
Not all people posting bearish analysis are you enemy. I'm just sharing my experience with trend structure. It's proven to be useful on more than one occasion.
====================================================================================================================================================================
First thing to say is when it comes to overall analysing of large trend structure, wicks can not be considered made breaks.
If we have big wicks on big charts going through big levels they don't really count. They count a lot for trading. Trading BTC certainly wasn't fun. For the question of has BTC made a valid breakout the answer would have to be "Not yet". It looks promising for one but if the huge swing up we had is rejected and eclipsed with no new high - it was just a trick.
So I don't think we can read too much into this other than to say there's a good chance whatever direction is picking over the coming days and weeks has high odds of being the overall direction for the foreseeable future.
It looked a lot like a break out coming. I got stopped out a lot of my shorts and the only reason I had any on in the drop was because I thought the indices sell off had legs and crypto might follow. That and ETH. Let's talk about ETH. I do not know all the correlations with BTC and ETH but what happened in ETH is very interesting.
ETH lagged BTC and while BTC was right at the very cusp of what seemed would be a run away break, ETH was hitting the 76. Classic bull trap level. I tried and failed with this trade in BTC but the tendency for bull traps to end here, BTC being at extreme limits of where failed spikes could form and indices looking bearish on 4 hour charts made me really interested in this.
Posted shorts on ETH near here.
That's a notable reaction.
The possibility of this type of move is what I was thinking when shorting BTC at the same level.
TA Odds Statistically Bull For BTC
As per the rules I use, if we break the 76/86 bulls have a 3/4 edge. 3/4 times it's going to go higher to at least a 1.27 extension (And this is often a breakout that will go further later).
The problem with probabilities is they can't be expected to be accurate on any one time event. So by these rules the odds favour the bulls but that's no more telling than a team being bookies odds in a sporting fixture. Doesn't ensure the future outcome.
Further to this is the tricky fact that if we're forecasting exceptional moves it's rational for these to be the times in which there's an increased odds of things not complying with what basic odds would predict.
So at this point I'd say based on BTC alone the odds favour the bulls but I'd think the implied bear move on failure of the up move would have a very high probability of being a really big move.
In the bull thesis a pullback to test the broken fibs is most likely and this is usually where I'd look to go long.
I don't plan to by default go long there this time. The confluence of risk off signals I find suspicious and if an overall turn in risk conditions was coming BTC doing this would be the ideal thing to fuel euphoria and make everyone overall bullish into the high. If that's what it turned out to be, it'd have been very good at it.
I'll be very careful if we get to supports. Trail my stops on shorts. But I'll wait and see if the supports can hold or break. A break could easily see a lot of the rally's gains taken quickly.
BTC looks and feels bullish now. But this is very early in the month.
If this turned out to be a wick and the month ended up closing down somewhere near the red line there'd be a very different outlook.
==================================================================================
If BTC breaks out there will usually be a little run and then a big retest.
Very bullish moves usually end up looking something like this.
Assorted bull forecasts are saying a breakout goes up here:
And I agree. Breakout could be extremely positive for BTC.
However, all of this momentum failing to actually produce any break save an extremely small period of time trading in what would be later viewed as a nominal wick if the market reversed would be a real reg flag for the possible trend failure.
If there was a trend failure on the weekly chart after this type of setup it'd be a really bad event. Even fitting it inside of the most bullish of analysis it would have the potential to produce a multiple year bear market.
A lot of people observe a 4 year cycle. But there can be little cycles inside of cycles. Another possibility is we're near the end of a 13 year cycle and due a correction that would not last less than multiple years. It would be, by a margin, the worst thing that's happened in BTC's trading history.
Note
Wick on the first weekly close. Note
Still managed to hold as a wick. Could be making a critical bear break soon. 60K seems like a really important level.
Note
Chances of this being a false breakout are getting far higher. I think we're on the critical supports now. If it goes, 32K entirely fair game.
Note
One more break and this can all go sour.
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