semasters

The Most Likely BTC Paths as of 02/10/18 (there are Only 3)

BITSTAMP:BTCUSD   Bitcoin / U.S. Dollar
To be a successful trader or investor, especially in Crypto, you must Be Ready For Anything! Therefore, we must consider all likely paths. The market is currently in a downtrend and until the downtrend stops, we must consider a continuation to the downside and what it might look like. Here are the 3 most likely paths.

The Market:

Path 1. tests back to the Low of 02/06/18 and then makes new highs (without making a lower low)

Path 2. reaches the resistance channel and then tests back to the Low of 02/06/18 and then makes new highs (without making a lower low)

Path 3. reaches the resistance channel and then makes a new low into the most extreme Buy point, which is the intersection of the lower downtrend (red) channel line and the long term (blue) rising trendline from late 2011. The rising trendline must be viewed on a logrithmic chart if you want to see it its entirety. Here's a link to a chart that shows it

If you are bullish on BTC             , then the obvious preference is choice #1. If you look at the chart linked just above, you can see visually why there is a good possibility that this low holds. Also, consider than the week ending 2/11 (tomorrow, as of this post) will show the highest weekly volume on BitStamp since early 2011.

But we must be ready for anything, and the current trend is down, so new lows must be considered. If we significantly break the current low, IMHO the market will get sucked down to the extreme point, which is simply the support trendline of the long uptrending channel. That's going to flush out a ton of sellers, leaving no place to go but up. If paths 2 or 3 are taken, there will be an opportunity for a sell against the resistance channel. With Path 2, the sell would have a lower probability of success than with Path 3, simply because Path 2 has already made a testback to the low, and we know there are plenty of reasons that the current low is a strong support point. If Path 3 is taken, you will be able to sell your long position for > $10k and buy back (for the next Bull Run) more than twice and maybe as much as 3 times the #coins you sold. That is huge! These two sell opportunities should be considered whether you are shorting or just exiting your long position.

Of course there are other paths, but the above are the most likely and in any case, their consideration should be a useful part of your analysis. I'll have more updates on this 'idea' as the market decides how it wants to proceed.
Comment: The market has now taken out to the high side the weekly doji bar at the recent low of 5920.72. The following chart indicates the significance of the doji bar and the accompanying volume. On prior occurrences you can see that new highs were always made. Will new highs be made from here? Probably, but we still have not had a testback to the low and one may be coming from the upper channel resistane line, which is currently in the 12,600 area.
Sir what are your thoughts?
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Thanks for the analysis and updates.

Could it be considered that the new "holding low" is in fact around 7500/7700, despite the dip to 6000, and that the testback to 6000 is not needed ?

And/or can't the recent dip to 6000 be considered as a testback of the previous lows of mid-november?
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semasters SColligo
@SColligo, Yes to your first question, as the market has consolidated for 7 days around the 8,400 area and then moved higher. However, my main reason for mentioning the testback is that if we go straight into the resistance channel line, it is more likely to be a tradeable sell if a tesetback has not occurred. Assuming the market hits the resistance line in the 12,000 area, it's still $4,500 back to 7,500 and $6,000 back to the lows. With a good execution on such a sell, one could significantly increase Bitcoin holdings if buying back at the subsequent testback low. I'll be looking for such a trade, but would need to see a clear daily bar rejecting the upper channel line before entering. Selling BitCoin after the 5,920 low is not to be taken lightly!

Regarding your 2nd question, I do not think of a downtrending market in a clearly defined channel as a testback, but rather just the end of a current trend. So testbacks, to me, are relatively quick w/o changing the trend at the degree of the original low (for a buy testback).
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SColligo semasters
@semasters, thank you for these answers.
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good analysis and thanks for sharing, appreciated. you have opened my eyes to a few alternate possibilities i wasn't seeing before, so thanks. keep up the good work!
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I don't have a preference, but based on market activity atm I see #3 as low probability. I never rule anything out completely though.
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@Box1515, Path #3 would be 3 drives into a Low where the common Low was the red channel support line. 3 such drives is a common pattern. I've mentioned some reasons why the current low is strong support. Any other facts to back up your thinking that #3 is low probability? If so, would like to know. Tx for commenting.
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Box1515 semasters
@semasters, well support at $6K was very strong, but provided that breaks I imagine we have a ton of support at the psychological $5K level. If that fails, there is sure to be strong support around $4K as that region represents an 80% correction from last year's parabolic rise and a lot of the technical traders are sure to have buys set there. We would have to break through all of those to the $2,800 level, which I believe is very unlikely. From a fundamental POV, the South Korean gov't has reaffirmed that crypto won't be banned and the US gov't has really been nothing but positive aside from their announced crackdown on tax evaders. I'm also looking at the big alts, many of which have bounced 70-100% from the bottom. It would be very unusual for them to bounce up that hard only to drop back to or below the recent bottom.
+1 Reply
@Box1515, Agree, especially about the Alts. So we'll see and at the same time Be Ready for Anything!
+2 Reply
Box1515 Box1515
@Box1515, I'll toss in one more also. The total market cap did a full V-shaped bounce and actually came up a little higher than where the drop started, which is the first and only time that has happened following a major sell-off in the last 12 months.
+1 Reply
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