crimsonronin
Short

One more swing low for BTC

BITFINEX:BTCUSD   Bitcoin / U.S. Dollar
I've been a bit of a bear over the past couple of months. I was a little premature 3 weeks back when I said which is why I haven't posted again until now, but I am pretty confident we are going to see the lows once more.

The setup on the daily, when viewed in log, is in a broadening descending wedge and a descending wedge in linear. These are still both bullish setups at the macro timeframes, but they mean some short term pain.

The targets
* A retest of the prior low $5900 - 6700, setting up a nice double bottom .
* If that fails to hold, a new low between $3200 - $4300.

If this plays out, then I'd be extremely confident the bottom was in and another bull run would be eminent.

I'd love to hear your thoughts.
Comment: As a trader you want to try to avoid being wrong longer than you have to be. It's costly and painful! So here are some key areas we should look for the original idea to be invalidated:



1. Obviously if we bounce here on the 38.2 fib, and make a new high, then most likely the idea is invalidated. There's a caveat here, but I'll explain if this eventuates.
2. If we bounce and make a new high at the 50 "fib" then that is a strong sign. Corrections often retrace to 50% of the prior swing high, so this is where we need to pay close attention.
3. The last stand is the 61.8. There was a fair bit of resistance here on the way up ie. $8k - $8.8k.

We must keep a close eye on those scenarios. But, if the 61.8 is taken out, it's almost a foregone conclusion that 6k will be retested. I expect to see a lot of buying here again and a bounce to $7.2k - $8k would be my target for a scalp long trade. I believe we will then make a lower low into the 5k range, and potentially the 4k range

Cheers
Comment: We have had a strong bounce over the past the past day from the 38.2. As I said in my last update, we need to make a new high now for the down trend to be invalidated. Something to the effect of:
Comment:
Comment: We are in a crucial spot for BTC right now.

On the 1hr, we have a rising wedge and significant bear divergence on the RSI:



However on the 4hr and 1D, we have a very large inverse head and shoulders:



For the latter to come to fruition, BTC needs to impulse with some force through the neckline (11.6k) which also happens to be the 38.2 fib.
Comment: We had a couple days of uncertainty, but it is looking more and more likely that the inverted h&s will play out. Again, above a daily close of around 11.5k - 11.6k and I'm going to close this trade/idea.
Comment: Today's price action, in my opinion, has rejected the IH&S. Instead of breaking through the neckline with strong volume, price and volume have declined.

We have now made a lower high from the previous swing and the buyers are no where to be found.

There are a couple of spots where BTC may find support:
* 20EMA; unlikely in my opinion
* 50MA + 50% fib: a strong bounce here would be a very good sign.
* 200MA: I think this is the most likely at the moment.



If we make it down to the 200MA, the game is certainly still bearish.
Comment: In my last update it did the exact thing I didn't think it would; bounce from the 20EMA. However, it wasn't enough to hold it this time:
Comment:

We made a big rising wedge, as previously noted, and broke down with some volume. Look for those key areas I've labelled above.

I am keeping an eye on the 4hr 200MA since if it is broken, our bearish scenario is still in play. If we get a strong bounce from the 50% fib, I would be looking for a long entry.
Comment: That played out nicely:



I expect a 1-3 candle bounce on the 4hr, then potentially more downside. I'll provide an update in ~8hrs.
Comment: So we didn't get much of a bounce, and instead we formed a bear pennant on the 1hr. I'm expecting 8.6k is now the next support zone:

Comment: We smashed through the 4HR 200MA, and now we are supported by the 1D 200MA:



If the 1D 200MA doesn't hold, we may be in for a bigger drop than I originally anticipated:



If we use a rising wedge, and measure the pole, it places us in the <$3k range. This may seem like a big stretch, but it's in play if the 200 doesn't hold. I will open a short trade if we close below the 200MA.
Comment: I will be looking for a short entry on a lower TF since we closed below the 1D 200MA.

We found strong support at the 200MA previously, but in a down trend, every time you test support, it becomes weaker.

I am thinking something like this will play out; 3 more days of down to give us a 9 on TD. We will likely go back up to the 200MA to test for resistance. And I believe it will likely fail to break above and make a lower low.

Comment: We spent a few days flirting with the 200MA, but the longer you sit on support in a down trend, the greater the risk of a big sell off:



I believe we will likely see ~6.4k within the next day or so. We should see a bit of a bounce at the 50% fib, then continue lower after it's rejected at either the 200MA or the 38.2 fib.

Hold tight, there's more low to come.
Comment: We have started to form a little bear pennant on the 1HR that has a target of $6.4k - $6.8k, which is the same target as the larger bear flag:



I think we get there over the next ~24-36hrs
Comment: Our pennant had a fake breakout which formed a bear flag instead:



Watch for a break below 8k to confirm, or a break above ~9k to invalidate
Comment: As suspected, we broke down:



We reached a TD9 on the hourly, and now we are in a 2-4 candle bounce, before we begin the next leg down.
Comment: The continuation of this idea can be found here:
hey @crimsonronin , fyi the target you put also hits the uptrend line coming from july 16th 2017 - september 15th 2017 - february 5th 2018.
Reply
Thanks mate.
Any thoughts on the the potential H n S here before this dump?
Reply
@kitkat16, are talking about the inv H&S:



This inv H&S is potentially still in play, but it does have a bit of resistance from the MAs to create the right shoulder. So I'm leaning away from this at the moment.

Or were you talking about this h&s on the hourly:


There are a couple things that make me hesitate on this:
1. doesn't have a super clean neckline.
2. the volume doesn't increase all that much.
3. the neckline was breached. (note it is often tested for resistance, but not usually breached).

Let me know if you have other ideas?
+1 Reply
Possible of course. I am going to wait till end of C of the current correction,
+1 Reply
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