BTCUSD Micro and Macro Falling Wedge

First things first: trendline isn’t valid unless it has three points of contact. In lower timeframes we like to look for a line acting solely as resistance or solely as support. On larger timeframes a trend line can act initially as resistance that the price action has to fight to break through then as support if the price is retracing (and sometimes that support eventually fails). So admittedly some of this is provisional.

Second thing: I hate having to tag falling wedges either as long or short to post this, because a falling wedge means you go short at resistance and long at support, but macro this is a long post so I tagged it long, even though I expect a lot more pain.

I am highly confident that the price of BTCUSD is going down. I set my target for the drop based off the height of the symmetrical triangle we have developed and my mind kinda just drew a line between Micro S1, S2, and my target. Most likely we are not going to slip some 24% in a day so I expect we will get some over-performance on this consolidation pattern. From there I drew the line connecting micro R1 and R2 and then I zoomed out.

Side note, when I draw my consolidation structures I like to throw a midline on there and extend it out behind what I am doing and see if it has any meaning, either before the structure began or within the structure, like a pitchfork be divided into quarters or by Fibonacci ratios. For example, that micro head and shoulders we see helps confirm my support line and the relatively high level of activity within the symmetrical triangle confirms the centerline, which helps validate the support and resistance, at least in my head.

The above chart shows the macro falling wedge we are in. The centerline I mocked up shows a high level of support, resistance and activity (the ovals) and starts add weight (in my own head, at least) that this falling wedge is more than just provisionally valid. Additionally, there are 5 points of resistance across the top and 3 touches across the support, with target 4 happening to land there and the tweezer bottom in mid-November showing that the area was generally significant. The black dashed line is the height between Macro S1 and R1 and is are ultimate target of the falling wedge, many months out, at about $9k.

What follows next is the Ichi Cloud drawn on the monthly chart with BLX data. Coincidentally, somehow, the falling wedge just seems to tough the beginning of where the cloud begins to climb rapidly. Additionally, falling wedges are best if they execute about 2/3rds of the way though (any further shows the selling pressure was higher than expected and not as bullish). As drawn the yellow is the length of the total wedge, the red is about 2/3rds of the chart, and the green is the 1/3rd where I expect about six months of consolidation to occur if I am right.

The rough target is $9,000 after consolidation is complete. There should be a massive weekly volume bar to show the end of the bear market when we land at the base of the wedge, and a massive green bar to mark the end of consolidation. After that things should start moving quick but we may not hit our 9k target until mid 2020.

I am not your financial adviser and I am not giving you trading advice, but I personally am looking to short until we hit support. I’ll assess then for bullish divergence and decide if I’ll hold the short as we bounce lower or flip positions.

Comment:

OK, it looks like my provisional micro-wedge didn't hold, but my median line for my macro wedge has held. I am going to tweek my midline down a bit to get it to line up but here is how it looks before the adjustment. We set a lower high and we will need to see how things go. I am still shorting until we hit support unless we break out of that midline.