BTC - where to next? The perfect stalemate
Updated
Today was an eventful day with the first CMOE futures contracts being settled. It started with a big drop and ended with a bounce back right at the opening - thus a draw. However, this draw to me at least, means a little bit more, it provides a hint about the overall market situation. I picked the daily chart because is very clear from this point of view.
First, a little bit of fundamentals about what has been happening around the world:
- we had the major meeting at Davos, where Bitcoin and blockchain technology seemed to be a hot topic among the "elites". While the opinions were split, there was a draw there as well; no extreme position taken by any of the "opposing" sides, thus a reading of "work in progress" , "let`s see if we can win something out from this"
- a major hack news with a staggering over $500 million theft left the market / BTC price almost untouched, meaning the market is becoming more and more immune to those kind of FUDs. Draw there as well
- regulatory talks all over the world are taking a milder tone and market participants seem to have acknowledge this. Everybody starts to agree there has to be some sort of legal framework for a lot of reasons thus we are slowly entering the "legal" era.
- a lot of "market movers" aka so called "crypto experts" or "trading / investing experts" were making a lot of "noise" all around Twitter, Steem, "classic" media, etc. either calling a hype or a doomsday ... no big impact on none of the coins
Now, back to our TA.
On the daily chart we can notice a few things indicating a perfect stalemate, thus reflecting the situation of incertitude aka consolidation described above.
- first of all we have a symmetrical triangle at the end of a down trend; as we all know, those triangles can evolve either up, down or sideways - very difficult to predict and the only hint that proves useful most of the time is the volume; in our case, not much to say, pretty constant all along. We are now entering the weekend and the triangle has space for exactly two more days until it reaches the tip ... still time to think
- secondly, this triangle formed exactly on both sides of a major Fib level, 0.618 or , for Bitsamp, $10945. This level is one of the most common for trend reversals but there is still one more left under it so it can be broken as well - some alts did it just one week ago, when BTC stopped at $9222.
- more importantly the price is exactly at the intersection of a down trend / corrective move with a long term uptrend - the two orange channels on the chart.
- Elliott Wave analysis, as it looks now, shows we had a 5 impulse waves up (starting on the 12th of November) followed by an ABC correction that ended on the 17th of January (comprised of smaller 5-3-3 cycles)
- all the indicators are flat, around the middle values ... no momentum either way.
- we do have the 30 EMA and the 50 SMA pointing down but are well above the actual price, so they will have to catch up until they will be able to put some pressure on it; on the down side we have a major buy area between $5000 and $7888 and actually we didn`t even reach the lower level of the current buy area (around or just below $9000)
So, the question is ... what follows next?
At this particular moment, it seems neither the bulls nor the bears are willing to play strong. So most likely until something happens that can move the market - not sure what now, since we covered this part in the fundamentals above - BTC will drag its feet up and down around those levels of mid $11000-ish to mid $10000-ish. If we look at the weekly chart, we are still in a good uptrend, so the up side might be in a better position however this a very long time which takes time to manifest. Still no definite clue on the shorter term.
As a final word just a bit of a warning to any "fast draw" trader / investor, mind the bull / bear traps; it seems lately there were a lot of them and in such market conditions will sure be plenty more
First, a little bit of fundamentals about what has been happening around the world:
- we had the major meeting at Davos, where Bitcoin and blockchain technology seemed to be a hot topic among the "elites". While the opinions were split, there was a draw there as well; no extreme position taken by any of the "opposing" sides, thus a reading of "work in progress" , "let`s see if we can win something out from this"
- a major hack news with a staggering over $500 million theft left the market / BTC price almost untouched, meaning the market is becoming more and more immune to those kind of FUDs. Draw there as well
- regulatory talks all over the world are taking a milder tone and market participants seem to have acknowledge this. Everybody starts to agree there has to be some sort of legal framework for a lot of reasons thus we are slowly entering the "legal" era.
- a lot of "market movers" aka so called "crypto experts" or "trading / investing experts" were making a lot of "noise" all around Twitter, Steem, "classic" media, etc. either calling a hype or a doomsday ... no big impact on none of the coins
Now, back to our TA.
On the daily chart we can notice a few things indicating a perfect stalemate, thus reflecting the situation of incertitude aka consolidation described above.
- first of all we have a symmetrical triangle at the end of a down trend; as we all know, those triangles can evolve either up, down or sideways - very difficult to predict and the only hint that proves useful most of the time is the volume; in our case, not much to say, pretty constant all along. We are now entering the weekend and the triangle has space for exactly two more days until it reaches the tip ... still time to think
- secondly, this triangle formed exactly on both sides of a major Fib level, 0.618 or , for Bitsamp, $10945. This level is one of the most common for trend reversals but there is still one more left under it so it can be broken as well - some alts did it just one week ago, when BTC stopped at $9222.
- more importantly the price is exactly at the intersection of a down trend / corrective move with a long term uptrend - the two orange channels on the chart.
- Elliott Wave analysis, as it looks now, shows we had a 5 impulse waves up (starting on the 12th of November) followed by an ABC correction that ended on the 17th of January (comprised of smaller 5-3-3 cycles)
- all the indicators are flat, around the middle values ... no momentum either way.
- we do have the 30 EMA and the 50 SMA pointing down but are well above the actual price, so they will have to catch up until they will be able to put some pressure on it; on the down side we have a major buy area between $5000 and $7888 and actually we didn`t even reach the lower level of the current buy area (around or just below $9000)
So, the question is ... what follows next?
At this particular moment, it seems neither the bulls nor the bears are willing to play strong. So most likely until something happens that can move the market - not sure what now, since we covered this part in the fundamentals above - BTC will drag its feet up and down around those levels of mid $11000-ish to mid $10000-ish. If we look at the weekly chart, we are still in a good uptrend, so the up side might be in a better position however this a very long time which takes time to manifest. Still no definite clue on the shorter term.
As a final word just a bit of a warning to any "fast draw" trader / investor, mind the bull / bear traps; it seems lately there were a lot of them and in such market conditions will sure be plenty more
Note
By the way ... I was thinking about something, on the funny side of the story:- the stocks have bears and bulls
- FOREX has doves and hawks
In order to gain a strong foothold as a distinct market, what should the cryptos have? :)
Note
One day later, after dragging its feet as expected just bellow the $15000 level at the upper edge of the buy zone, looking at the chart we might think we have a clue about what is coming next: an upward movement.It can be seen the symmetrical triangle resolved nicely and abcde cycle with a break on the upper side and with a few consolidation candles afterwards (thus the probability to be a bull trap is smaller). Also, the shape of the breakout looks like a bull flag.
There is nothing confirmed yet at this point, is just a weak, fable signal that things might go up.
Note
One more thing, the price is doing the consolidation just above the 50 SMA on the 4h chart, which is also above the 30 EMA - another small clueNote
Today it seems the little breakout continues slowly. Looking at the daily and 4h charts, the price might go up to finish a bearish bat formation around $13300-ish level.On the way up, there are a few obstacles, like the first down trend line (dotted blue) then 30 EMA daily plus 0.5 Fib level. The last leg of the bat will meet the second down trend line (dotted blue as well) and maybe the 50 SMA. If you want to try, this is a very risky trade so good luck.
Note
As underlined in the main idea, the path of least resistance is sideways ... thus the breakout seems to have run out of steam and the price is back down to the $11000-ish levels.Note
Not much as an update here ... the price went down as expected until it reached the continuation of the lower edge of the triangle, just a bit under the Fib level. It might happen that this lower edge of the triangle to become a up-trend support line, but we need much more than this.Note
Today was the bears turn to try their hands. After the weak bull run, today we had some sell off to $9700. What this might mean is a setup for a range trading period (dotted blue lines). Let`s see what the next few days will bringNote
It seems the bears are reaching the end of their turn as well. For the moment, the dip was down to $9500 and the RSI on the hourly chart is already forming a bullish divergence in the oversold area. Also, the 30 EMA is far behind so all the signs are there that we will have a fast rebound soon. Since the price didn`t reach the previous low of $9222 yet, we might have another try at it, so if you want to enter the trade be prepared to hold another dip (just in case)Note
A few hours later, it seems the RSI bullish divergence was a correct signal on the hourly chart. We can see a nice impulse EW cycle of 12345 up until the 30 EMA on the hourly chart; the meeting point is a resistance level, since it also marks the point of a previous swing low ($10280-ish). On the 4h chart we can see the price is still well below the 30 EMA, so for the very short term I expect a slight rebound now and then a continuation of this small uptrend up to the $10600-ish levels. There will be the "to be or not to be" question in regards to "where to next" for short term - few daystradingview.com/x/8PxSIpc8//image]
Note
Few hours later, the price completed the expected ABC correction just a bit above the 0.786 Fib level and it should resume its up movement towards the 30 EMA on the 4h chart; meeting point expected to be around $10600-ish levels. Please note we are looking at very low volume, so anything is possible, this is just one way of looking at the chartsNote
On a side note, from a fundamental point of view, it seems that finally South Korea moved on the FUD phase and starting tomorrow the gates will open again for new users on their exchanges. With Samsung also announcing they started to produce ASICs, we might be on the verge of another hype soon. Still some time to go, but good to keep an eye on those fundamentals as wellNote
What do we have here? :) Another perfect round number: $9333. This is the stop that was in place today on Bitstamp in regards to the dip we saw. As I was warning on the previous update, despite the early sign of a up-trend, we might witness one more dip ... here it was.In the great scheme of things, I am very confident this was the end of the down movement and now BTC is starting the long way up towards $13000. Besides the fact we had this perfect $9333 (like so many times before at reversals points) marking a very close double-bottom with the previous low of (yet another perfect) $9222, on the 4h chart we can see the fractals repeating. The only difference was the length of time, we were in a slightly "stretched" version - instead of 8 days it took 13 to develop.
Moving forward, I think I will close this idea and start a new one once we have a confirmation of the above (the up trend towards $13000-ish, for a test of the medium term down channel)
Here is the chart I am looking at:
Thank you for watching / following / commenting and good luck with the trades
Trade closed manually
Note
PS: "kids don`t try this at home" kind of super-warning: finding the bottom is beyond extremely super risky business, I could say is outright gambling. So, trading / initiating / closing positions at bottoms and or tops is from TA perspective mission impossible. However, if anyone looks for holding / investing, those dips are like gold mines, as long as you are confident the underlying market / asset is going up; and I mean long to very long term like months even years.The key in all those investments is money management: always use money you will never regret losing and out of this money, only use 5% to 10% max to initiate such a long position. If it pays out, in the long term you gain a lot. If things go south, 5% out of something you won`t regret anyway ... is just like enjoying a coffee :)
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