In my last idea, I expect we would turn down at $6800 or move up to the $7100 area then go down to make a major low at the end of July. As it turned out, we turned down at $6800 but there was not enough bearish momentum to drive us down into a major cycle low.
I managed by risk and stopped out of my short in profit at $6550 and generally stood on the sidelines with the exception of a buy stop at $6880 to capture the breakout.
There are a few different options that I'm looking at right now"
1. We started a new bullish cycle 2. We extend the cycle and find a low in late September 3. We started a new cycle and will end up finding a low October - Decenber.
I believe we are still in a bear market and still have work to do before I'm comfortable calling it a new bull market. So right now I expect #2 or #3 are most likely.
This move is strong enough that I obviously cannot ignore it and I will be looking for evidence that we have started a bull market.
Sharky made a comment in the last post before the low that sentiment was too weak to go much lower and that we would return to the mean at the 200 EMA. I felt that longs were high enough and that sentiment was more neutral. However, Sharky was spot on and I misjudged sentiment. There were too many bears to drive price lower. That's why you trade with stops.
What Would it Take to Be a New Bull Market?
I think it's fairly clear that the 200 EMA is now going to be important. If this is a bullish a market and a bullish weekly cycle, then it needs to clear that 200 EMA, start trading above it and start trading above the downtrend line and ultimately form a right translated cycle with the peak past the halfway point. If we see that happen in coming months, then I will certainly be looking to build a long position. I just think its too early.
Will I Short?
At this point I won’t short until I see how the market trades. However, I do believe that $7800 is going to have potential for a nice risk-reward short trade because there are is a confluence of resistance there:
200 Daily EMA at $7800 area
$7850 is the 50% fib retracement of the move down
It's the measured move from the IHS so you will get some profit taking.
Horizontal supply zone
Downtrend line is hovering just above
It’s still possible we get a daily cycle low in late July or an extended one in August. However, we may have a short or long cycle in here and without clarity I would not put much emphasis on it. And if $5700 was a weekly cycle low, the DCL counts will end up changing. As we trade from here we'll get more clarity.
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I was waiting for it to pullback to go long and looking for bitcoin to hit $7800 so close to the 200 EMA. But noticing alt coins are getting destroyed. Ethereum getting killed, but BCH, LTC, EOS, XRP going down and continuing down.
This worries me a bit because more often that not we get selling. Often people are selling alts then start selling BTC to take profits.
Maybe something else is happening and alts are going to continue down while BTC goes up. I'm going to take a small short and if we break to new highs, I'lll just get out of it. Not enough bearishness to take a large position. We're close to $7500, so I'll keep my stop tight. If we go up to $7800 I'll re-short up there.
This is more of short term trade not something I plan to hold unless we get major volume selling or some other price action.
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Covered no gain or loss. So just flat in cash. I bought a few alts as they are down Its forming an ascending triangle and tight range. I'll bracket order the top and bottom on a small trade.
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I caught a bracket order at the breakout, had a take profit order at $7700 that hit, but I missed my other order I had to take profit at $7750. After it started selling aggressively I sold the rest and took a small short. Well below the peak. In many cases with resistance in that area and no pullback I would scale a big short in at $7700-$7900 but we have been so bullish I didn't feel comfortable with that strategy.
So I shorted $7570, added a $7500 and added again when we broke that trend line. Its still a small position and I'm looking to add if we retest that trendline. If we recover $7550 again. I will be close to break even and I will cover as that would be too big of a bounce. I may go long if we consolidated that area again.
I'm expecting more likely that we pullback and retest $6800-$6900. The .328 fib is a good area plus its a demand zone. I will look to take profit at $7050 first then $6950 is where I'd flip to long unless I see something that bothers me.
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Bitcoin consolidated here, then dumped right before close but was bought up with aggression. all the sellers are out at $7500 and its likely going to break up.
This is a case where I will not short $7800. Too much consolidation below and if it breaks it can run much higher. Even though $7800 is probably going to be an area to pause, I would rather see it show weakness before I try a short. Too much positive momentum right now.
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This is a situation where if you have a position long from much lower you should just hold or put a stop in profit. Its tough to short but still so overextended. We are at resistance so you could short with a tight stop but after you consolidate in a big range then break the top of that range your chance of continuation is high. If we stay around this area the next 24 hours and never take a shot higher, then I might close a small long I have and try a short but at this point I could see us breaking the trendline and jumping to $8500.
The TD Sequential count is a TD8, so we know an 8 or 9 is higher chance of reversal but 9 could be $8500.
Its also due a daily cycle low and even if you thought late July is a DCL, its still due a 30 day half cycle low so we will get a pullback. But from where?. At this time I'm not going to short. I have a small long but its a scalp and not a swing trade position. Sometimes you just have to be patient and wait for a better situation.
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I decided to close my long and open a short here. Super tight stop and I'm not messing with it if it goes over $7800. Why?
1. Right at fib 2. Right at trendline 3. Big move all came over the weekend 4. horizontal supply 5. Many Alts just tanked hard and this makes no sense
The alternate scenario is that people are liquidating alts to ride bitcoin up further. Maybe. I think this trade has a 25% chance of working out, but since I can put a stop real close its worth a shot and I made some profit on this scalp up.
If we break through I'll probably just wait to find another short higher. Think its just getting too late to risk a move up even though I could see it spiking much higher.
If we do break $7900 then its a lot like the break out at $6900, it could squeeze shorts and take them to $8500, so be careful and be willing to miss out if you short.
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Another stop run that got bought, so thats the sign to get out. Notice this is different than last few months where a big dump like that will continue down. In this case, there are tons of dip buyers and they are chewing away at $7700-$7800 area.
So no reason to short unless I see bearishness come back in. My guess is that we'll eventually get some profit taking but who knows when.
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Once we broke $7900 it was game over. All the Bears got over run and now we'll approach $8500. I had a feeling this $8000 level didn't hold. And price action told me not to short or at least close shorts when trading didn't justify it.
With the weekly cycle low confirmed at $5700, I am not in a position to be neutral. it would be too early in the cycle to look for a short, but we should get at least a daily cycle low or even a half cycle low soon. Depends on where you count.
As as I said above I could see us breaking the trendline and overshooting the 200 EMA and that is what happened. Every day that we hold above and use it as support,helps the bull case for a long term turn. Now we have to see if this ICL can become right translated and give us a swing low on the weekly.
Usually when bitcoin goes up without pullbacks, we can see a strong sell off. But I see a lot of bullish price action here so I'm more neutral. It's a TD9 on the daily and certainly overextended so we should get a pullback at some time. But I'm not looking to short for now.
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Breaking down, should hit that $7800 target zone as long as it stays under $8250.
I will buy in that zone and then end reinforce at $7400 and I think there is a good chance we have at least another leg up. Then I'd be looking for a bigger pullback and we'll have a better idea of direction and see if bitcoin will be ready to another bullish cycle.
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Bitcoin got past the 200 EMA and I think the next big hurdle is this 200 SMA and horizontal resistance.
I've drawn 2 scenarios that I think are possible. The green bar pattern would be .a move over the 200 SMA then backtest for a shallow DCL. This would be a major buy for me to see this. Confirmation comes with a daily close over 10k, but I would position for a bull run if we get something like that.
The red scenario is the 2014 or 2011 silver market where we rally with no pullback, hit that 200 SMA and then reverse hard.
Medium term price action is definitely bullish and I haven't seen anything to get me bearish yet.
Generally, to turn bearish I'd have to see signs of distribution uip here in the $8000-$9000 area. So far this looks like consolidation.
Got stopped out on my 8350 short last time but short the upthrust! :)
Sharky8899.
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We might get a swing monthly candle mybe.... ages ago last seen lol
rzmb44
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@Sharky8899., That would a good step. I generally want to see monthly swing, next month close higher. Then to get a weekly dip and form a higher high. By that time you start printing a right translated weekly cycle and I would be full time bull.
That wouldn't be my favorite way to turn, but thats just how markets work. I've never bought a bottom on a slow turn like that. The only time I can catch a long term bottom is if we get an aggressive capitulation candle during a weekly cycle low timing band.
Still think odds are better that this is just a bull trap. Traditionally at this stage, the bull trap won't be as powerful as the last 2. We had 6k to 12K, $6500 to 10k, I think we may end up with $5700 to $8500 or $9000 then we'll see the bearish trend resume. But every week we have like this is another week I keep an open mind.
Sharky8899.
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Get on the bull Train, the Train is about to go to the faking mooooooooooon!
LOL, jokes aside.
We are at almost day 30... this has me worried. Even if it rallys then its will start getting in the timingband for a DCL.
What you think?
rzmb44
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@Sharky8899., The price action is super bullish but sittin in resistance now. When you get that kind of consolidation and start breaking up, it can keep going. It's a TD8 so tomorrow the sequential can hit a 9 plus a DCL drop at any point. There's good resistance but if it $7900 breaks I could see it pushing straight to $8500 because there just isn't much holding it back. It never pulled back enough for me to get in so I'm just sitting in a small scalp I picked up after the dump and we reversed back to $7500. But its too high to trade long and short term bullish for me to short. So I have a stop at break even and will watch. No matter what happens, I'm just staying small and waiting for a better trade
JigsawBot
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Sad that I missed the laddered short from 7800. Didn't want to leave orders open overnight with no SL.
rzmb44
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@leumasx, Thats why my short is small. I had an order that would have hit and got me started n a short at 7750 but it didn't hit and I was afraid to put any order of size. The market turned too fast for me to close my long and get a short so I had to stay small to manage risk. But thats part of trading bitcoin.
JigsawBot
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@rzmb44, I was confident that the daily RSI would not have crossed over previous high @ April 24th but... better safe than sorry!
deliciouspodo
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Man, I missed out on the whole upside.
I agree with 7800 being a really great area for shorting with a tight stop (8020~ish)
I think it might spike up to low 7900s
rzmb44
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@deliciouspodo, Yeah. $7800 should be a magnet, but as I said below, Its not uncommon to see overthrows of the 200 EMA and gets people extra bullish before getting dumped on. I would still short that area with a stop if I see a big rejection or loss of momentum.
Got stopped out on my 8350 short last time but short the upthrust! :)