BTC - The Pain Trade - Hold On to Your Panties Shorts
Another week goes by and Bitcoin' is looking more like the air simply left the room. However there are some clues that something is lurking in the depths of the order book and it is evident in the chart. It is also evident in the so called expert analysts that seem to be swayed and confused daily as to which direction the market is headed.
The consolidation pattern we are seeing is likely a continuation trade. The ole Darvos box trading method. Love it and one of the simplest trades out there. Hey nothing wrong with keeping it simple. There are numerous trading techniques focused on consolidation from the Bollinger "Squeeze" to the Darvos' box. In price action it is just consolidation before the breakout. But something seems to be keeping it down. We have noticed several small price action moves recently, not with just Bitcoin 0.10% but with others as well. These little observations with price action are providing clues of accumulation.
Range bound low Volatility:
Bitcoin' is clearly trading in a range bound market with the 6k level forming a pretty solid floor. The range has been between 6k and 6800 for almost 2 months now, and the structure is providing some insight that we may be looking at a trend reversal.
This very low period of volatility is telling that the market is less and less likely to just fall apart here. After the Fake-n-Shake of weak hands the previous rally has failed to fall apart. Weak markets fall apart quickly, they do not linger around consolidating for weeks. But this is exactly what we are seeing and it is a sign of accumulation. We have mentioned that larger institutions like Yale, Harvard and others are investing into the space. Do you really think others are not? This again is evident in the price action we have noticed recently.
Insider Trading:
So for 9 months now we have heard calls for 2500-3500-4500 and we are still trading above 6k. In August the SEC' stated it would "review the Bitcoin' ETF' rejections". Hmmmmm? I want to thank someone, who sent me the VanEck presentation for the 9th -6.94% of October meeting with the SEC'. This presentation was to insure the SEC's concerns about a Bitcoin' ETF' have been resolved. Hmmmmmm. And we still have this silent price action. Bitcoin' just refuses to fall apart, and this may be likely due to institutional investors accumulating ahead of an announcement. Again evident in the price action.
Keep in mind, neither you, nor I nor my cousin Vinny (who seems to know everything) have insider information. One thing the insiders can NOT hide is order flow. Clearly there is accumulation taking place and any selloff is being bought up faster than SwissView can fill up my comment space with 53 charts and a bunch of FUD about Tether and a market collapse. How is that short working "Bro"? Do you think there will be a warning? Do you think you will catch a spike if a Bitcoin 0.10% ETF' is announced? Do you think the market makers are not engineering trades to accumulate as much as they can? Do you think the shorts are going to lose their panties?
Pain Trade:
One thing to keep in mind is the pain trade. The percent short to long is 60/40 or 60% of the leveraged market is short interest right now. Take into account we are trading near a low not a high. There is always risk in shorting near a low and especially a low that has put in a pretty solid floor. The pain trade is to the upside, in other words more people will be hurt on a breakout than a breakdown. The contrarian trade is long and the pain trade makes it just this much more sweet! This is going to knock a bunch of Shorts out of their panties. They will blame the whales and claim they got out "just in time". I know my cousin Vinny will. "Yeah bro got out just in time man, can I borrow $100 to go to the track?" Yep that's cousin Vinny alright, always on the right side of the trade, but somehow always broke.
Tether
Before I get the comments on Tether I covered this in another article. I wrote an entire article on Tether and why it is unlikely we see a collapse. In short there is too much money and too many big players in the market here. It far outreaches Bitfinex and goes to the core of everything, from a potential ETF's to a huge alt coin market. Though I do not recommend holding in Tether, or having coins on Tethered exchanges, at this point it is simply old news.
Summary
As the market is looking to reverse, we are slowly looking to add to our long term portfolio, SLOWLY. I know everyone wants action but ask many how action is working out? We are not going to fill up our portfolio with a bunch of crap, but coins that show the structure, formation and chart patterns that provide the best opportunity for success. It is not going to be 15-20 coins either, it is going to be a few coins with good structure period! It has been a long 8 months but after cutting out a couple under-performers we are looking to position for the next bull run.
Don't kid yourself, it could be closer than you think. Sure we can retest 6k or even 5400 but the longer we don't the less probability we do. IF we do, I am willing to step in and buy. After all keep up the FUD shorts sell right into the hands of the institutions waiting to take your coins. If you are short, you may want to hold on to your panties, because the pain trade is on you!
The consolidation pattern we are seeing is likely a continuation trade. The ole Darvos box trading method. Love it and one of the simplest trades out there. Hey nothing wrong with keeping it simple. There are numerous trading techniques focused on consolidation from the Bollinger "Squeeze" to the Darvos' box. In price action it is just consolidation before the breakout. But something seems to be keeping it down. We have noticed several small price action moves recently, not with just Bitcoin 0.10% but with others as well. These little observations with price action are providing clues of accumulation.
Range bound low Volatility:
Bitcoin' is clearly trading in a range bound market with the 6k level forming a pretty solid floor. The range has been between 6k and 6800 for almost 2 months now, and the structure is providing some insight that we may be looking at a trend reversal.
This very low period of volatility is telling that the market is less and less likely to just fall apart here. After the Fake-n-Shake of weak hands the previous rally has failed to fall apart. Weak markets fall apart quickly, they do not linger around consolidating for weeks. But this is exactly what we are seeing and it is a sign of accumulation. We have mentioned that larger institutions like Yale, Harvard and others are investing into the space. Do you really think others are not? This again is evident in the price action we have noticed recently.
Insider Trading:
So for 9 months now we have heard calls for 2500-3500-4500 and we are still trading above 6k. In August the SEC' stated it would "review the Bitcoin' ETF' rejections". Hmmmmm? I want to thank someone, who sent me the VanEck presentation for the 9th -6.94% of October meeting with the SEC'. This presentation was to insure the SEC's concerns about a Bitcoin' ETF' have been resolved. Hmmmmmm. And we still have this silent price action. Bitcoin' just refuses to fall apart, and this may be likely due to institutional investors accumulating ahead of an announcement. Again evident in the price action.
Keep in mind, neither you, nor I nor my cousin Vinny (who seems to know everything) have insider information. One thing the insiders can NOT hide is order flow. Clearly there is accumulation taking place and any selloff is being bought up faster than SwissView can fill up my comment space with 53 charts and a bunch of FUD about Tether and a market collapse. How is that short working "Bro"? Do you think there will be a warning? Do you think you will catch a spike if a Bitcoin 0.10% ETF' is announced? Do you think the market makers are not engineering trades to accumulate as much as they can? Do you think the shorts are going to lose their panties?
Pain Trade:
One thing to keep in mind is the pain trade. The percent short to long is 60/40 or 60% of the leveraged market is short interest right now. Take into account we are trading near a low not a high. There is always risk in shorting near a low and especially a low that has put in a pretty solid floor. The pain trade is to the upside, in other words more people will be hurt on a breakout than a breakdown. The contrarian trade is long and the pain trade makes it just this much more sweet! This is going to knock a bunch of Shorts out of their panties. They will blame the whales and claim they got out "just in time". I know my cousin Vinny will. "Yeah bro got out just in time man, can I borrow $100 to go to the track?" Yep that's cousin Vinny alright, always on the right side of the trade, but somehow always broke.
Tether
Before I get the comments on Tether I covered this in another article. I wrote an entire article on Tether and why it is unlikely we see a collapse. In short there is too much money and too many big players in the market here. It far outreaches Bitfinex and goes to the core of everything, from a potential ETF's to a huge alt coin market. Though I do not recommend holding in Tether, or having coins on Tethered exchanges, at this point it is simply old news.
Summary
As the market is looking to reverse, we are slowly looking to add to our long term portfolio, SLOWLY. I know everyone wants action but ask many how action is working out? We are not going to fill up our portfolio with a bunch of crap, but coins that show the structure, formation and chart patterns that provide the best opportunity for success. It is not going to be 15-20 coins either, it is going to be a few coins with good structure period! It has been a long 8 months but after cutting out a couple under-performers we are looking to position for the next bull run.
Don't kid yourself, it could be closer than you think. Sure we can retest 6k or even 5400 but the longer we don't the less probability we do. IF we do, I am willing to step in and buy. After all keep up the FUD shorts sell right into the hands of the institutions waiting to take your coins. If you are short, you may want to hold on to your panties, because the pain trade is on you!
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