As the saying goes, "Fool me once, shame on you. Fool me twice, shame on me."
That said, the one thing I've learned in my trading journey is it's better to be always be somewhat skeptical of the market. When something appears 'too good to be true,' it often is.
Applied to the markets... When things seem too and everyone is getting too over-joyed and seeing nothing but 'greedy green,' it's often a good time to take a step back and watch how things play out, or start looking for opportunities to SELL into all that exuberance.
This was the case these past couple weeks.
After studying the daily BTCUSD chart, it became clear to me that accumulation had clearly taken place on the around the 6.5-6.8k region. This sort of accumulation (where the price was clearly being suppressed) followed by huge price mark-up, led me to conclude their was a large whale/institution (hedge-fund conglomerate) in the waters . And thus, it would be to my best interest to follow their lead.
To the un-experienced eye, this price action may have seemed organic, however, with all the bear-traps and bull-traps in between the ascent, it became clear this was purely price manipulation by the "Boogie Whale."
The 'Boogie Whale' is the institutional market-maker (or individual) with the means to influence the price to their favor during periods of low liquidity. They can move the price up or down (pump or dump) -- often playing on people's pain and over-exuberant (FOMO) emotions.
Make no mistake about it, the initial huge initial spike triggering the bull-run was a well-orchestrated short squeeze using the bears to fuel the price Mark-up. (I actually saw someone lose over 7 figures in that one squeeze).
Then, we had a nice pump to almost $10k, a nice round psychological number (which also happened to be a clear technical level of resistance.
The moment the daily candle closed, the double-top was clearly in formation. This confirmed a good short entry was in play (for me) and that the top had been reached for now. Having initially opened a short position at 9020, I was forced to close for small profit and re-enter starting from 9.7k.
For now, the short has been very profitable (thus far), and I am trailing my stop on the way down to what I believe would be back to 7.8 or less. Although many people remain skeptic it will go that low, I feel that it can only hurt to follow the crowd.
I was once told by my trading mentor, "To succeed as a trader, you have to think like a institutional market-maker... Trade along side the whales; not against them."
This advice has served me well.
Looking at the 4HR chart, I can easily see the 8K level of support being tested eventually, as it will serve as major support level, and should provide a decent bounce, since many experienced traders will be watching this level.
That said, trying to time tops and bottoms is a sure way to inevitably lose money at some point, since prices can often go much lower and higher than expected.
Let's see how things go over the next 24 hours.
My stop loss will be set under 8.475k.
I am okay with leaving some profit on the table, so long as I do not lose capital. That said, I am doubtful we will break 10k, which is why I plan to exit early. There is a chance we surge as high 9.5k, which is also an area I will look to re-enter my short.
Should be another fun 24hrs :)
At this point a break under 8.7 k would be a warning sign for me that we are heading lower, since it was the higher low I was looking for.
Let's see what happens.
Right now it seems like we may rally to 10k or double top around 9.7k before dumping. With the weekend drawing near, my guess 'the big dump' will happen by Sunday/Monday.
I do not believe we will break 10k this weekend without heading under 9k first. The rally was premature and failed to build much support along the way. We may see a double-top, which will likely trap more bulls and liquidate some bears.
Keep in mind, a break of 10k is not completely out of reach... For example... If positive SEC news does print by Monday morning, that would be the best time to surge (maybe).
That said.. There is still ton of resistance at 10k, which is now even greater than before, since a lot of bulls remain trapped and will surely look for a way out.
We will need a greater surge in volume to break 10k. Not impossible, but improbable for now, IMO.
If we were to break 10k, it will need to be done so with lots of force, otherwise I will not be convinced that the move is organic. For now, I anticipate a double-top. I will ride my short and will await for confirmation if I see signs of trend reversal.
Many seasoned traders/investors will be looking for some capitulation this time around, and a strong dump (followed by a strong rally) under 8k may provide this.
Anything above 8k will be too soft -- leading to dead cat bounce.
A strong shakeout with a rapid rally back up will be the most expected route.
If the price breaks below 7.5k, however, it may dip into the 5k region. This scenario is not very likely, unless there news to drive the price further downward.
If this were to happen, market sentiment will be greatly affected. A lot of 'moon landing' hopes will be shattered. Fear and uncertainty will undoubtedly return.
This scenario may be what the larger institutions are after, which would set them up perfectly to scoop massive amounts of BTC from all the weak hands which let them go.
Should be an interesting month.
That said, I am expecting strong resistance around 9.25-9.275k. This is the neckline on the aforementioned H&S.
Failure to break this level will yield a significant drop to 8.2-8.5k. There is a lot of support in this region, and will likely be the best place to close my short as I anticipate a bounce from this region to rally back to 10k.
Keep in mind, this scenario also plays well into the lower high (and higher low) needed to be set on the weekly, which is a healthy sign of consolidation and bullish continuation.
I suspect we will have some clarity by Friday, but for now, I remain steadfast in my short position.
That said, I do believe BTC is not done retracing yet, and I am anticipating some more downside action before were surge upward. 8.5k serves as psychological support, however, I not believe it will hold over the weekend (let alone today).
I am aiming for bullish re-entry sub 8.3k, and will begin assessing from this point.
The lowest this retracement will go, IMO, is 8000. However, 8.2-8.25k would be nearly ideal. Anything under 7.7k would almost certainly be a death certificate.
My guess is we dip down below 8.3k sometime within the next 24-48 hours and begin our ascent to re-test 10k during blockchain week next week. Will this be enough to break 10k??? I am still doubtful.
From here, I am expecting for a surge upward to at least 9k. This may take several days to play out as I am expecting a bit of up and down action in between.
What I am expecting is a double top to form on the daily and reverse back to test 7.5-7.8k region. As always there will likely be some sort of timely FUD to accompany the technical side of things.
Although I am bullish long term on BTC, I do take a lot into my analysis other than simple chart patterns, Fibonacci, drawings, etc. I also take into account market psychology and the psychology of the larger players who have the power to stear the market.
Ask yourself, "If I were a whale with the power to shift the market, what would I do to make sure I can secure whopping amounts of BTC at the best price possible."
If you study Wyckoff trading strategies, you'll understand how larger institutions think. You'll also realize most of market dynamics are simply a series of pumps and dumps.
Taking this into account, you can see that we are still in the distribution zone. This price is purposely being held at this level and will be purposefully driven back up (or 'marked' up) to the worthwhile price of 9.8-10k
Keep in mind, however, 10k is a region of high resistance. Before the recent surge, there were a ton of sell orders in this area, and I suspect there will be more than there was before, since there are trapped bulls (in pain) who want nothing more than to break even.
All of this leads to a less likely scenario that we break 10k and that we reverse.
But then again, anything can happen. After all, this is 'cryptoland'.
I still think a rally to 10ish to be possible, however, consensus will need to be successful and must unveil some good bullish news to carry the momentum forward.
Let's see what happens.
There is a great amount of support at 8k, so I would be surprised if we broke through it. However, if we do, we heading down to the 7.5k-7.8k region. At the same time, if we do break through 8k within the next 24-48hrs, Wyckoff distribution is certainly complete, and we'll be looking for another round of accumulation soon.
That said, I still believe we will bounce and rally back up from 8k to a minimum target of 9k. I will begin scaling in orders in pyramidal fashion from 8050 and below.
Let's see what happens.
DISCLAIMER: My analysis and opinions are mostly based on the current trends and chart analysis. That said, you are inevitably responsible for your own decisions. Trade at YOUR own risk. Cheers!
On the other hand, if we dip below 9k from 9.35k to test 7.5-7.6k, a rally from there would almost certainly break 10k. But... I would sooner guess we rush to test 9.8-10k sooner, which may increase the probability of being being rejected (unless there is some good news as we surge upward).
In summary... I believe another (larger) dip awaits if we reject from 9.8-10k.