Why BTC fractals are not always trustworthy
Hello!
In this chart I'd like to show that you can find nice fractals everywhere, because fundamentally markets are driven by human mass psychology and since this mass psychology doesn't change, the patterns also repeat.
But are they always to be trusted? No. One has to look at a lot of different factors and check if the situation now is similar to the situation of the comparison fractal.
In our case here, many people expect a nice pump like the one in the beginning of april.
However, even though the pattern before the pump looks very similar, the market conditions now are quite different.
One has to realize, that whales play the market in order to make nice profit with leveraged longs and shorts. It is very easy if you have a lot of coins. You look at the ratio longs vs shorts. If for example one is much higher than the other, i.e. shorts much highter than longs,
you can create a short squeeze, with one strong buy. This triggers a cascade of shorts that are closed, forcing the price higher, closing even more shorts, a short squeeze. Those whales wentl leveraged long before that, and made some nice profit, and sell their coins alter for
a higher price, because the ensuing FOMO drives the price even higher. A win win for them.
However, as you can see, now the situation is quite different. Leveraged shorts are much lower, in fact, the longs are much highter than the shorts. This means that one should not count on a short squeeze like the one beginning of April.
From looking at the overbought 4 hour and 1 day stoch RSI, a declining price is more likely. I say more likely, because one can only speak in probabilities here. I give a 70% chance that we grind down, and a 30% chance that we still go up, despite high longs.
When trading BTC, it is always good to look at the long/short ratio, because then you have a good overview of the general market sentiment, which is more bullish than bearish now. And most of the time it is good to do the opposite of what most people do, hehe XD.
Since I like doing the opposite of most people, I have a moderate short position open atm.
In this chart I'd like to show that you can find nice fractals everywhere, because fundamentally markets are driven by human mass psychology and since this mass psychology doesn't change, the patterns also repeat.
But are they always to be trusted? No. One has to look at a lot of different factors and check if the situation now is similar to the situation of the comparison fractal.
In our case here, many people expect a nice pump like the one in the beginning of april.
However, even though the pattern before the pump looks very similar, the market conditions now are quite different.
One has to realize, that whales play the market in order to make nice profit with leveraged longs and shorts. It is very easy if you have a lot of coins. You look at the ratio longs vs shorts. If for example one is much higher than the other, i.e. shorts much highter than longs,
you can create a short squeeze, with one strong buy. This triggers a cascade of shorts that are closed, forcing the price higher, closing even more shorts, a short squeeze. Those whales wentl leveraged long before that, and made some nice profit, and sell their coins alter for
a higher price, because the ensuing FOMO drives the price even higher. A win win for them.
However, as you can see, now the situation is quite different. Leveraged shorts are much lower, in fact, the longs are much highter than the shorts. This means that one should not count on a short squeeze like the one beginning of April.
From looking at the overbought 4 hour and 1 day stoch RSI, a declining price is more likely. I say more likely, because one can only speak in probabilities here. I give a 70% chance that we grind down, and a 30% chance that we still go up, despite high longs.
When trading BTC, it is always good to look at the long/short ratio, because then you have a good overview of the general market sentiment, which is more bullish than bearish now. And most of the time it is good to do the opposite of what most people do, hehe XD.
Since I like doing the opposite of most people, I have a moderate short position open atm.
Comment:
Correction: The left green oval should stretch to the peak at 11300.