After a bloodbath in selling this week with a decline of approximately 20% in the past few days, a short-term bounce may be underway in BITSTAMP:BTCUSDCOINBASE:BTCUSD.
There are three types of market participants (perhaps more) engaging in driving price higher in the short term.
Shorts are probably covering. This includes dealers who are covering short put positions that crypto holders bought to hedge or trade.
Long-term crypto investors and enthusiasts are seeing the move, likely hoping they have caught the bear-market bottom (and like typical bottom hunters, they may be thinking of the millions in profits that will be earned when BTC tops $100,000 some day—and I don't blame them, we all think of such things).
Traders are looking for a reversion to the mean, hopefully using stops and discipline to make a few thousand.
BTC has been making a desperate attempt to hold its 200-week SMA (shown as the purple line above) after breaking below it on June 13, 2022. At least for now, BTC has climbed back above it. But this level will be critical to hold on the next retest. The fact that it was broken on the first attempt is not a positive sign.
In the short-term, a reversion to the mean—at least on short-term intraday time frames—may be underway. As long as this uptrend line holds on the 30m chart below, and as long as the 8 EMA and 21 EMA on the 30m chart remain viable as support, the bounce could continue back to the key Fibonacci level—which is now resistance after having served as major support before it was broken yesterday. This level, as noted in the linked article, is at 26,400 approximately. More immediate resistance lies closer at 24K-25K as shown by the blue rectangular area above price in the 30m chart below.
If a trader wishes to short in the direction of the larger-degree trend, it would be advisable to wait until BTC retraces back to a key resistance level and—preferably—shows signs of stalling and reversing there.
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If you haven't seen the updated analysis from @Tradersweekly, be sure to review it as well as it discusses some of the substantive issues behind the selling this week in addition to providing technical analysis.
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Here is the 30m chart mentioned above, where the 8 EMA and 21 EMA are—for the time being—serving as support. If that support fails, then all bets are off yet again.
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The below chart shows another potential area of resistance where price could reach in the short-term. The dark circle super-imposed over the blue trend line would also be a key area where a bounce could reach before being sold again.
I can't see a bounce happening to the dark circle. Heikin Ashi candles don't lie ;)
SquishTrade
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@MiserableToppings you are probably right, and if be surprised if it retraced that far. :) Do you use HA candles primarily / regularly on your charts?
MiserableToppings
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@Burning-Theta, Nah I'm an imposter came here 4 days ago. I know nothing hahaha :D
SquishTrade
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@MiserableToppings, haha, good wit there mate. Seriously, what kinds of candles do you use? I've honestly never used HA, but read briefly about them
SquishTrade
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Imposters are all over twitter pretending to be actual people, public figures, traders, etc. I think it doesn't work as well on TV b/c most people do not display real identity to begin with. Is there another MiserableToppings? LOL Your alias makes me laugh, it's great BTW
MiserableToppings
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@Burning-Theta, Thanks! I think it is funny too. I'm serious about me being new here though and not knowing more than what some hundred google searches over the week have led me to understand. Literally, everything I read contains a word I don't know. I like to put into practice what I've just learned by commenting about it on a post. For example, I learned about Heikin Ashi candles, saw how they were useful in the daily chart for taking out some noise and seemed historically true, so I posted a bait comment here hoping you might argue against them if you were feeling strong about your opinion on the bounce. But it didn't work out. But I did learn you're not so solid on that bounce, which means you're a little more bearish today than yesterday, and that coincides with some latest news Trading View put out. So all in all, thanks for replying and hope we keep up the chats in the future!
SquishTrade
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@MiserableToppings, Sorry I didn't take your well-intentioned bait. ;) You were way too kind about it, and I thought you were reasonable for thinking this bounce may not extend as high as the downtrend line. With regard to comments on posts, some TV members I've met (with thousands of followers) suggest that a lot of crypto investors / enthusiasts are super trolls, and like to be fairly nasty. I've had a few in my comments (the one on BTC has a couple milder ones). I try not to engage, but late at night when tired, anything can happen i guess when people are super obnoxious.
In any event, thanks for commenting and being respectful even if you disagree. I really like disagreement and debate when it's respectful, constructive and well reasoned.
Congrats on jumping in to learn about investing and trading. I'm not that far ahead of you, having been at this for only 2 years now, it's a very tough learning curve, and I'm still not certain hard work and diligence necessarily pay off for everyone (hoping I'm lucky with some hard work). But without it, many traders won't survive. The fact that you're trying to learn a lot is very prudent and smart. It seems a lot of traders (esp. penny stocks and crypto) grab some fancy looking indicators (without mastering them) and throw some cool looking charts together that look like a sci-fi map or a video game ad, and start throwing money at trades right away. A great way to lose money fast once markets switch from bulls to chop and then bear market.
Honestly, I did a fair bit of that in my early days—not the crazy charts, but losing a ton of money fast. People call it "tuition" to Wall Street, and it sucks. If you survive that phase and learn to manage risk, and master a bunch of other stuff, there's a chance to win over time.
MiserableToppings
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@Burning-Theta, Thank you for the diligent reply! Yes, I was shocked to see all the video game ads too and the throngs of support they grab. . .which is why I was drawn to your account. I'm not sure if it is common practice to learn here at Trading View or just a place to check in for confirmation bias (at least in the BTC domain of the site). It seems to be very much the latter? I say this because for every account, I go through their old charts to est. a rough score for how accurate they are with predictions. And there seems to be no correlation between a recently uploaded chart's reception with the trader's historic performance. If a trader were way off (not slightly, I understand it is very hard to predict anything to a T) for >85% of their predictions, I would receive their most recent chart with caution, but does not seem to be the case. I hope the community may consolidate more over time, and not just keep turning over these sci-fi map traders, as you say, once the previous lot burns out.
SquishTrade
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@MiserableToppings, I think you're very right about most of this being confirmation bias. Honestly, there are only about 5-7 trading view accounts I follow. Anthony Crudele is amazing, he is a pro for sure. He trades futures for S&P 500, Nasdaq and crypto futures and may trade crypto too, not sure. I like his honesty (esp. in recent months) about frustration with losing trades even as a pro, and his humble but apt reminders to get back to basics. I follow him on both TV and Twitter (though I hate Twitter in general) strictly for learning more about his way of viewing charts, even though I don't use his interesting indicators. There are other pros I follow too on YouTube and Twitter, but I can't list them all now. There are some very good traders here on TV, I'm sure, and I could find more if I tried, but it's time consuming to find them. It's smart to be selective and careful as you've said. But most of my learning is elsewhere (books, videos, blogs, options industry website, etc.). I trade mostly options and stocks . . . More later :)
SquishTrade
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The answer to the question posed in the title of my post is now abundantly obvious! I am now gaining confidence that BTC will reach my 12,173 target mentioned in the linked post