Psychology- it's a wonderful thing. Did you know that between November 13th and December 18th, approximately 6.2-7M Bitcoins were dumped by the market? Source: data.bitcoinity.org/markets/volume/6m?c=e&t=b (These are not unique Bitcoin, just TOTAL Bitcoin.) The strongest daily RSI drop in the history of Bitcoin. It was a warning.
Above, we have two Elliott wave counts. One is bull, one is bear. The dominant trend is bear, so we have to assume that until proven otherwise, the trend is and will remain down. Considering the structure of the bear count, it DOES still allow room for a minor bull count which is what we may be seeing now.
Since my last post about the strength of this hidden divergence I've wondered and wondered why we haven't dropped yet. I've also noticed longs and shorts increasing during this SIDEWAYS action. Why? I'd like to point your attention to two charts.
First, longs: Longs have broken out of a MASSIVE bull flag and are quickly approaching ATH, situated at 40,193 BTC. First of all, why hasn't there been a long squeeze yet ESPECIALLY with this divergence, and why do people keep adding to their longs? These are likely institutions playing a dead-cat bounce. They're smarter than most of us, they are PROFESSIONALS who do this for a VERY good living.
Shorts: Shorts recently fell dramatically from profit-taking. They also kept falling as people were taking profit, until the sideways falling action we've been in since January 11th ended with a nice big green dildo. At this point, the only shorts left in the market are ones well above our mid-term resistances, retail, or institutions collecting a position at the highs as we move to our final short-term resistance. They have a LOT of room to go up, and as of now have potentially established a bullish ascending triangle. This would insinuate that upon eventual breakout of said triangle, there will be a reason that A LOT of shorts (Well past ATH) enter this market. Likely, the bullrun of 2020/2021.
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Facts + psychology behind it, for those willing to read: We are at a pivotal point in this market. It's very clear we have established a bearish pennant. We are about to have a 50/100 MA death cross on the weekly. We have yet to establish bullish divergence in the RSI. We have now bounced twice off the 200 MA, each time producing lackluster results. Volume is near the 6k drop all over again.
We have a few possible scenarios I see as to how this plays out.
1) We fail to complete the 5th leg of this wave and bart down, which is what EVERYONE IS WAITING FOR. The third attempt finally breaks the bear pennant and down we go.
2) We rally up to resistance, possibly faking out of the bear pennant. This would SURGE longs on the re-test of the resistance from the wedge. The divergence in this case would be even more extreme than it is now. THEN we use the new 'stupid longs' as fuel and down we go.
3) We rally out of the bear pennant and bart up to like 4.5k-5k, potentially ending the bear market or being the fake of the century.
I just don't believe the bottom is in. I am admittedly new to these markets, but I'm beginning to understand the psychology that runs them. If you believe in Bitcoin, what do you do? You accumulate more as it gets cheaper, no? What do you think the big boys are doing? The problem is, big boys are using futures to accumulate far more than they would have been able to in the first place. Wonder why bull flags always seem to fail? Because THEY'RE THE ONES MAKING THEM. We need VOLUME, which means we need many more BUYERS, and NOBODY seems to be interested in these prices en masse. The institutions taking us down are EN MASSE.
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IF we don't bart down within the next 2 days I think we rally to bear pennant resistance, or possibly have a fakeout above and fail to close a daily above $4,100 to invalidate the divergence. Then, down we go to potentially as low as 1.1k. I do not see triple digits happening, but if they do, it will be very short lived IMO. I'd expect buying pressure to be insane in that area.
You have only yourself to blame if you lose money trading BTC. Institutions know where to HOLD their orders because THEY are the ones making this market. Play with them, or against them.
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Believe it or not, I feel like the most bullish version here would be to retrace and test the .786 retracement of this bullish impulse, THEN go up. That would show that there is much more support below us than just the 200 MA. I also suspect that it has a higher chance of happening than us breaking the 50 MA any time soon.
I'd be surprised to see us go literally any farther at all on this rally at this point. I can SEE $4,100 if we DO go bull, but I see a minimum re-test of the 200 MA on the weekly first to be more likely. Considering we just had a high volume rejection again of the 50 MA and above, as well as the weekly close coming tomorrow with a death cross, I believe our short-term direction is now down. If we go much of any further at this point, it will cause even more severe divergence especially if we cannot clear $4,100. This is rough..
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I started watching price action right after the new daily candle, and I must say...this is weird. Bitcoin is outright ignoring a really severe rejection. A rejection that looks to me like is meant to 'nudge' the market into dumping but it isn't working. Mark my words what you're staring at is likely a sentiment test, and is attempting to spark something.
Something is very weird with Bitcoin right now. I'm not calling the end of the bear market here but I am remaining cautiously optimistic that the bull targets and 1.618 extensions shown will be some solid profit targets.
A 1k+ Bitcoin long.
Longs are pretty much now at all time high and traveling within a bearish ascending wedge. A breakout above this wedge would be an interesting thing to see... I'd be very nervous to be a bull right now. The only way I'd be bull is 'in hopes' that this is the literal end of the bear market. One thing I've learned in this market is that you don't 'hope'. Otherwise, longs may get squeezed and outright slaughtered. Thing that isn't sitting with me right though, is that if people were nervous of a long squeeze looming why would longs be piling in?!
Something isn't right. My gut legit wants to call the end of the bear market right here and now, but for once I'm sticking to what the indicators say. Still, something is definitely different about Bitcoin and the entire market the past few days. Volume is still lackluster and really makes me wonder..
My gut wants to scream crazy bull so bad...so bad. Especially with how many people would be caught out of position if this ends up being a cornerstone. Another thing I've wondered about, is that a LOT of these longs are from right before we rocketed to $4,200, are they ADDING here?
This is either the trap of the century or this is going to surprise literally EVERYONE. My gut says we're bull but my indicators say we're still bear.
$3,151 or $4,100.
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data.bitcoinity.org/markets/volume/24h?c=e&t=b According to this chart, 13 THOUSAND BITCOIN were traded yesterday during that rejection wick. Normally speaking when we have a wick of that size it isn't this amount of Bitcoin. I've watched very carefully what the volumes are during spikes like this and they're usually in the hundreds, not the double digit thousands.
This rejection right here had a volume of 13 thousand BTC. Originally, I thought it was a short fill, a textbook one... Until I peeped the volume, and now see a wick above that rejection. That was A LOT of Bitcoin bought. Wtf is going on?
The current rejection has over 5k BTC being traded already. If this is a trap, damn is it a good one. But damnit man my gut is screaming bull right now. Weekly had a death cross but has so far not slowed momentum down even the smallest bit. God this is some funky price action
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Daily shows we're now trading above the 50 MA.
Weekly shows the 50/100 death cross now in effect:
Man this is strange..
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Expect heavy heavy resistance here. The only way we're getting through this resistance is if the bulls come out to play for real. I still don't see us going much farther but we'll see.
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We're at the edge. If this breaks out with volume...holy moly look out above
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If this thing breaks. IF. We're going straight to 5k. This is an ABC trap though. So many longs are about to get annihlated
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We have a bonafide breakout of the bear pennant.
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You have all been warned. This is going to turn into an outright slaughter. What happened at 6k RIGHT BEFORE we dropped? Hidden divergence from a RALLY.
If you're in a trade you better have tight stops and STICK TO YOUR PROFIT TARGETS.
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Just had a thought for the bullish side of things. In each of these gray boxes was a significant rejection. These were short fills in my opinion. ...What if they're still there? We'll be above 4k in no time at that rate. This is a tough situation but I'm not convinced yet. We need a higher high with the amount of force bulls are displaying. ANYTHING less than that in my opinion is going to result in a dump.
“Anything other than $4,100 and $3,156 or so is just noise IMO.”
Really, once we go above or below then let’s review. Analyzing noise in between is busy work.
TradingShot
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Not impossible but hard to ignore buy signals like this.
deactivatedaccount123
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@TradingShot, Hard to ignore the sell signals too ;)
TradingShot
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@MC_Peewee, Indeed! That is why I keep a long term approach.
deactivatedaccount123
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@TradingShot, It'll be interesting to see how this rejection plays out. Considering the strength of the divergence in the RSI this could be fun to watch :) Long term I am very bullish on Bitcoin as well but I believe the way you portrayed your chart is that we're AT the bottom. That's a bold call, Cotton..
ThumbSkin
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Hmmm.... interesting opinion.
deactivatedaccount123
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@ThumbSkin, This isn't just an opinion, it's backed up by facts. The 50/100 MA death cross on the weekly is very telling IMO. ALTHOUGH, back in 2015 when we had the 50/100 MA death cross, local support was only breached once, prior to a multi-year bullrun. So one could argue that we are very close to, if not at, the bottom.
UnknownUnicorn1615160
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bitcoin is hitting overbought on all time frames so i expect some sideways choppy action. I took 10% profits off the table around 3,850 but leaving the rest of my positions out there to ride. my break even is just below 3.4k. looking for fresh buys around the 61.8 to 72.6 retracement if there is a pull back so 3700 to 3600 level if bitcoin finds solid footing. just wanted to put that out there so you know what a bull is thinking...
Goku_Trader
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The Venezuelan/Paraguay transaction was a test run. Imagine how much bitcoin it would take to settle trades between just those two countries. How many other countries have currency issues and would rather back away from the US dollar. The transaction might seem small and innocuous ($7100) but the point is it's possible. How many countries would be able to get around US sanctions and conduct business in Bitcoin? Indicators and right down the middle. Trust your gut.
deactivatedaccount123
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@Goku_Trader, I can see the uses Bitcoin has, especially when it comes to sanctions and getting away from the dollar. Trust me when I say, I'm a permabull. I really reaaaaally want to trust my gut here but it's hard because my gut is exactly what got me rekt in the first place. Granted, when I was HEAVILY trading I didn't know as much as I did now, but my gut is also what told me that 6k wasn't gonna break and look how that turned out :\
I dunno. Indicators are still fairly bearish IMO, but I also cannot ignore that the bulls were able to hold 50 RSI. That's kind of a big deal especially with this severe of divergence.
I'm stumped here, not gonna lie. I'm usually a decent analyst when it comes to BTC but this is uncharted territory for me.
As a wise man said below -
“Anything other than $4,100 and $3,156 or so is just noise IMO.”
Really, once we go above or below then let’s review. Analyzing noise in between is busy work.