Bitcoin's consolidation continues and a price gap remains
Good morning, traders. As we ease into the week, we continue to watch Bitcoin moving sideways and consolidating ever more. I have mentioned multiple times recently that if you're looking to enter any position right now, long or short, you absolutely must understand that you're entry is exponentially more risky than it was weeks ago. If you are not trading with a known risk/reward ratio, then you should not be trading. As cliche as it sounds, especially in trading, failure to plan is planning to fail.
Overnight, we saw Bitcoin drop out of the noted triangle as I mentioned during the live stream was most likely to happen, and the gap was filled at $6527. A gap does remain at $6488 so I continue to believe we will see a move down to that area, at least, to fill that gap before price continues higher. RSI on the daily is printing a symmetrical triangle in unison with price. A breach of the resistance or support should coincide with price's breach of its own resistance or support. While the daily MACD did breach the descending resistance, it continues to hug the ascending support line increasing the likelihood of falling below it and testing the lower support line. Daily OBV has continued to rise since August 14th, but recently has seen lower highs as it, too, consolidates into a symmetrical triangle.
While it is always possible, at this time I don't believe that we will head below $5000 and stay there for another year or two as so many individuals in CT, YT, and TV suggest. However, I do see the distinct possibility for a shakeout to occur prior to an uptrend. The key remains the $7400/$7450 level. A move above that level confirms the complex fulcrum and we should be headed up higher, beyond $8500 to create a higher high. However, a move below the $6300/$6400 level should result in a shakeout whereby we see price drop, encouraging weak hands to sell their supply and enticing the bears to go short, and then a price rebound trapping the shorts underwater. The resultant short covering and liquidations will then propel price higher as the retail herd, fooled into going short, attempt to recover their losses as the realization of the final bear trap becomes evident. Remember, this is just an opinion and we don't trade on opinions. It is merely the beginning of a trading plan and, as such, can and should change as new information deems it necessary.
The 1D chart shows my updated accumulation notations. It also shows the previous IHS in blue and the HS in red. Remember, the HS is part of the fulcrum and, together, they create that complex fulcrum we have discussed. As mentioned above, we need a break above that ~$7400 level (the top of the right shoulder), denoted by the horizontal red line, to confirm the pattern. If we see the shakeout materialize, traders should watch the CMF to get an idea of the seriousness of the drop. The CMF closing above 0 as price drops should indicate a price rebound. The CMF closing below 0 as price drops indicates that price is much more likely to continue lower. If we do see that drop in price, I wouldn't expect to see price drop any lower than $4900, however since that's the level expected at the least, then it seems more likely we will only see a move down toward $5400 to quickly trap shorts that have the aforementioned expectation. The daily S2 pivot sit at $5418. All this being said, we do not necessarily NEED a shakeout to continue higher, hence the mention about a move above $7400.
Overnight, we saw Bitcoin drop out of the noted triangle as I mentioned during the live stream was most likely to happen, and the gap was filled at $6527. A gap does remain at $6488 so I continue to believe we will see a move down to that area, at least, to fill that gap before price continues higher. RSI on the daily is printing a symmetrical triangle in unison with price. A breach of the resistance or support should coincide with price's breach of its own resistance or support. While the daily MACD did breach the descending resistance, it continues to hug the ascending support line increasing the likelihood of falling below it and testing the lower support line. Daily OBV has continued to rise since August 14th, but recently has seen lower highs as it, too, consolidates into a symmetrical triangle.
While it is always possible, at this time I don't believe that we will head below $5000 and stay there for another year or two as so many individuals in CT, YT, and TV suggest. However, I do see the distinct possibility for a shakeout to occur prior to an uptrend. The key remains the $7400/$7450 level. A move above that level confirms the complex fulcrum and we should be headed up higher, beyond $8500 to create a higher high. However, a move below the $6300/$6400 level should result in a shakeout whereby we see price drop, encouraging weak hands to sell their supply and enticing the bears to go short, and then a price rebound trapping the shorts underwater. The resultant short covering and liquidations will then propel price higher as the retail herd, fooled into going short, attempt to recover their losses as the realization of the final bear trap becomes evident. Remember, this is just an opinion and we don't trade on opinions. It is merely the beginning of a trading plan and, as such, can and should change as new information deems it necessary.
The 1D chart shows my updated accumulation notations. It also shows the previous IHS in blue and the HS in red. Remember, the HS is part of the fulcrum and, together, they create that complex fulcrum we have discussed. As mentioned above, we need a break above that ~$7400 level (the top of the right shoulder), denoted by the horizontal red line, to confirm the pattern. If we see the shakeout materialize, traders should watch the CMF to get an idea of the seriousness of the drop. The CMF closing above 0 as price drops should indicate a price rebound. The CMF closing below 0 as price drops indicates that price is much more likely to continue lower. If we do see that drop in price, I wouldn't expect to see price drop any lower than $4900, however since that's the level expected at the least, then it seems more likely we will only see a move down toward $5400 to quickly trap shorts that have the aforementioned expectation. The daily S2 pivot sit at $5418. All this being said, we do not necessarily NEED a shakeout to continue higher, hence the mention about a move above $7400.
