Over the past five days I have been calling for a rally to $7,950. At the same time keeping a close eye on the triangle that started forming on 2/6, which I am considering a no trade zone. Today I have changed my position and would recommend looking for an exit if you have an open long. Depending on your entry there should sill be plenty of time to exit at breakeven or even a small profit over the next couple days.
Yesterday I mentioned that the Stochastic had not been this oversold since 8/18/2015. Now %K and %D have crossed over and are posturing back upwards.
From here I am expecting a 2-14 day rally before heading back downward. Below I have outlined the reasons which have caused me to turn from fully bullish into a short term bear. I have also outlined the key areas of resistance that I will be watching out for.
Finally I have provided the final confirmation that I will be looking for before entering a short position with my entire trading roll.
Close below 50 Week Moving Average
On Sunday we closed a weekly candle below the 50 period moving average for the first time since 2015. Last time we did that we proceeded to fall by 60% over the next year and it took almost two years to climb back it’s prior value.
If we follow a similar path from here then it would put us at $3,000 per Bitcoin this time next year.
Weekly TK Cross on Ichimoku Cloud
There was a TK cross on the weekly for the first time since 5-26-2014. Shortly afterwards the price proceeded to fall by 73% over the next 7.5 months. That would put us at $2,000 per BTC in the middle of December.
Bull div in the OBV shows move money going into Bitcoin over the past three months than coming out. Indicates that a rally should ensue. Did not see this divergence in 2014 and it is one of the only bullish indications that I am still seeing.
Volume gap in the Visible range points to $4,200
Areas of Resistance
1. Entry: $7,675 on or around 5/31 (Horizontal & Trend)
2. $7,950 on or around 6/4 (Horizontal & Trend)
3. $8,050 on or around 6/4 (Horizontal & Trend)
4. $8,745 on or around 6/11 (Trend & Daily Fractal)
5. $10,055 (Weekly Fractal)
Short Sell Entry
A) If price falls below $7,025 in the next two weeks then it is highly likely we will fall by 15%+ and it is also likely we will breakdown through $6,000 support.
B) Could also stagger orders to sell levels of resistance outlined above. Set 25% of your roll at each area of resistance and set stop loss above daily fractal at $8,800 or weekly fractal at $10,055
Personal I much prefer the risk:reward of option A. Anything can happen when Bitcoin is rallying and I think it is much more risky to go for the latter option. It does offer a greater rate of return, but is that worth the amount of times you get stopped out shorting against FOMO buyers?
One last note about my general philosophy in regards to shorting Bitcoin. I am a hodler and will be until the day I die. I fund my margin account with Bitcoin. Therefor a short sale is a form of a hedge and is not nearly as risky as people can make it out to be - especially in a bear market!
I will have my stop losses set and consider it to be a win/win situation. If Bitcoin continues to tank then I will be in a good position with a leveraged short. If Bitcoin rallys through my stop loss then I will be in a better position, based on how much of my personal net worth is invested into crypto.
Smash the like and remember that following is free!
Yesterday I mentioned that the Stochastic had not been this oversold since 8/18/2015. Now %K and %D have crossed over and are posturing back upwards.
From here I am expecting a 2-14 day rally before heading back downward. Below I have outlined the reasons which have caused me to turn from fully bullish into a short term bear. I have also outlined the key areas of resistance that I will be watching out for.
Finally I have provided the final confirmation that I will be looking for before entering a short position with my entire trading roll.
Close below 50 Week Moving Average
On Sunday we closed a weekly candle below the 50 period moving average for the first time since 2015. Last time we did that we proceeded to fall by 60% over the next year and it took almost two years to climb back it’s prior value.
If we follow a similar path from here then it would put us at $3,000 per Bitcoin this time next year.
Weekly TK Cross on Ichimoku Cloud
There was a TK cross on the weekly for the first time since 5-26-2014. Shortly afterwards the price proceeded to fall by 73% over the next 7.5 months. That would put us at $2,000 per BTC in the middle of December.
Bull div in the OBV shows move money going into Bitcoin over the past three months than coming out. Indicates that a rally should ensue. Did not see this divergence in 2014 and it is one of the only bullish indications that I am still seeing.
Volume gap in the Visible range points to $4,200
Areas of Resistance
1. Entry: $7,675 on or around 5/31 (Horizontal & Trend)
2. $7,950 on or around 6/4 (Horizontal & Trend)
3. $8,050 on or around 6/4 (Horizontal & Trend)
4. $8,745 on or around 6/11 (Trend & Daily Fractal)
5. $10,055 (Weekly Fractal)
Short Sell Entry
A) If price falls below $7,025 in the next two weeks then it is highly likely we will fall by 15%+ and it is also likely we will breakdown through $6,000 support.
B) Could also stagger orders to sell levels of resistance outlined above. Set 25% of your roll at each area of resistance and set stop loss above daily fractal at $8,800 or weekly fractal at $10,055
Personal I much prefer the risk:reward of option A. Anything can happen when Bitcoin is rallying and I think it is much more risky to go for the latter option. It does offer a greater rate of return, but is that worth the amount of times you get stopped out shorting against FOMO buyers?
One last note about my general philosophy in regards to shorting Bitcoin. I am a hodler and will be until the day I die. I fund my margin account with Bitcoin. Therefor a short sale is a form of a hedge and is not nearly as risky as people can make it out to be - especially in a bear market!
I will have my stop losses set and consider it to be a win/win situation. If Bitcoin continues to tank then I will be in a good position with a leveraged short. If Bitcoin rallys through my stop loss then I will be in a better position, based on how much of my personal net worth is invested into crypto.
Smash the like and remember that following is free!
emasar Indicator is available for purchase at alphanalysis.io/product/emasar/