A sudden flash crash turned a good day into a bearish day
Everything was looking dandy for bitcoin and litecoin...litecoin appeared to breaking out above a bull pennant and btc seemed well on it's way to the original head and shoulder pattern and then suddenly a whale or two must have decided to take a sizeable profit, enough to trigger an avalanche of auto sells creating FUD in the non auto sellers all culminating into ending the days candle on a shooting star doji. Never a good candle to see as it signals a trend reversal. I personally think it's just there to allow for a overdue retracement, and am still optimistic about the bulls. Especially with segwit finally being integrated...I also feel that this dip will finally kickstart the rest of the altcoin market which has been more or less flatlining ever since litecoin and btc went leroy jenkins on everyone now may be a good time for a brief short but I have a feeling it wont dip below our last retracements low. Tread cautiously and stay pragmatically optimistic. This short is only short term until the brief retracement is over..I think it will only be brief because I still think we will reach the head and shoulder price target as well as flirt with the top of the green channel.
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I think the retracement could last maybe 1 day-3 days max...just a hunch based on the momentum we've been having. I also think the altcoins will start to rise.
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my guess is the lowest we will go before turning back around and being done with the retracement is 10500 however the 50EMA on the day chart seems like it might act as solid support paired up with the brown ascending trendline...if this is the case we may see it bounce back around the 10700s.
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indeed on the day chart both the 50ema and the bottom line of the ascending tan channel are directly at 10,727 which will likely act as a double reinforced support.
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interestingly enough it just got a bounce up off the tan dashed hypothetical neckline I drew for the larger head and shoulders pattern that I was starting to assume was invalid...maybe an inverted head and shoulder pattern can be double triggered after all...hmm not so sure yet will have to wait and see. I think the 50ema and channel line have a higher probability of being the real support of the day, but it could be possible that its that neckline.
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so it just bounced beautifully upward off the double reinforced support like clockwork. Let's see if it tries to test it again or goes straight back up. That would have been an ideal buy in point if you were able to. with a stop loss at around 10499
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there is currently an autobuy wall of around 360 bitcoin on the gdax depth chart at 10500 so I really don't see it getting past that which is why I say a smart stop loss is 10499
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maybe even set the stoploss at 10490 just to be safe incase it some wicks just under the wall.
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however I think we've found our support at the 50ema on the daily chart combined with the upward trend wall.
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Another bounce up off the 50EMA on the day chart that support is strong! it's got that upward channel trendline backing it up!
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And yet another clockwork like bounce off of the 50EMA ascending bottom trendline duo. Because the range of the ascending channel is so tight and we just had a shooting star day candle there isn't much room for it to bounce upward at the moment but it is a great sign to see it holding up the fort.
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I don't see any bounce up going higher than 11500 at most and that would just be a wick most likely...because the last day candle closed as a shooting star it is most probable that current day candle will close with both a lower high and lower low than yesterdays...we've already achieved the lower low as well as seemed to have found this candles bottom. Now we need to establish where the lower high will be.
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however there is a chance that we could close the current 1 day candle identically to yesterdays morning star which may in a sense cancel the 2 out and allow for the bull climb to continue. One very interesting current development is on the 4 hour chart there already appears to be a bullish reversal hammer forming. a new 4 hour candle will start 2 hours from now so it will be interesting to see if this current 4hr candle closes as a hammer that would be a very welcome sign. I've also readjusted the tan trendlines and found that they are actually forming an upward ascending wedge...the end of which is coincidentally enough right at the same spot my extended "hypothetical" head and shoulder price target is, which means the hypothetical head and shoulder double trigger is still in play. I will post an updated screen shot of the chart on my next idea to show you what I mean....if it's legit then I'm very excited about it.