As we approach day 60 of the correction we are starting to see signs of a bullish market. Keep in mind that patterns alone are not as important as when we see them within the context of the prevailing trend. Currently we have been trending to the upside since the derivatives market crash and are recovering nicely. We are consolidating and have a clear ascending triangle formation with a flat top at the 9000 level. The overall context of the horizontal channel we have drawn between 7900 and 9000 are not only important Fibonacci levels but important support and resistance levels going back to the final run in December. We have also formed a small rounded bottom on the four hour chart along the trend line.
When looking at a chart, all to often you see calls for flags, triangles, head and shoulders, cups and handles, wedges etc. Being able to draw one of these on a chart does not mean much, which is why they often fail leaving new traders stunned. One thing to understand that the breakout direction is more important than then the formation, and whether a pullback or throwback occurs increases or decreases the odds of a continuation. With this said, the context and underlying fundamentals and sentiment of the market is what creates these patterns. So these must be used in conjunction with the pattern itself or as statistics has shown, its a coin flip.
Looking at the context of the broader market, we have had a nice bullish movement off an extreme low and have consolidated nicely between 7900 and 9000 or the 0.382 retracement and 0.382 extension of the previous bull movement. Theses are also interesting support and resistance levels going back to November and December where 7900 went from resistance to support before the bull move to 11k after of which 9000 was the support level from the pullback where we bounced with a "V" formation pattern setting up the run to 16k. We have also formed an ascending flat top triangle which is a generally considered a consolidation pattern prior to a breakout either up or down, and withing this structure we are completing a rounded bottom along the trend line. The 8290 level is the 0.618 retracement of the previous move between the 7900 and 9000 levels and we are consolidating nicely into the peak of the triangle. So what are we looking for as a possible trade?
A breakout of the 9000 level sets up nicely for the 9738-9840 levels which is the 0.618 extension of the previous bullish move and the 0.618 retracement of the previous bearish move. We could see a throwback so I will look to close out somewhere below the channel. If your a scalp of day trader this is probably the first setup I have seen in a while to trade BTC. However ascending triangles also break to the downside. A break to the downside I will be looking for a pullback around the 8290 level for a shorter term trade to 9740.
The long term market is still bullish and we have only completed the 3rd or 4th wave of a longer term move. The current shorter term structure is forming nicely for a bullish move and our previous targets from the last post are still valid. Sentiment is slowly changing and more and more I am hearing "should I buy here", and not "do yo think we can go lower". Sentiment drives markets in the end and clearly this is changing to the bullish direction and the chart patterns are confirming this not leading it. I do not need to turn on the weather channel to see if its raining outside, I just need to walk outside.
Bottom Line: It is not the pattern that is important, but the overall trend structure and market sentiment that is creating the pattern that is. Understand the difference. Trading is not connecting the dots, it is more important to know which dots to connect to get a clear picture.
When looking at a chart, all to often you see calls for flags, triangles, head and shoulders, cups and handles, wedges etc. Being able to draw one of these on a chart does not mean much, which is why they often fail leaving new traders stunned. One thing to understand that the breakout direction is more important than then the formation, and whether a pullback or throwback occurs increases or decreases the odds of a continuation. With this said, the context and underlying fundamentals and sentiment of the market is what creates these patterns. So these must be used in conjunction with the pattern itself or as statistics has shown, its a coin flip.
Looking at the context of the broader market, we have had a nice bullish movement off an extreme low and have consolidated nicely between 7900 and 9000 or the 0.382 retracement and 0.382 extension of the previous bull movement. Theses are also interesting support and resistance levels going back to November and December where 7900 went from resistance to support before the bull move to 11k after of which 9000 was the support level from the pullback where we bounced with a "V" formation pattern setting up the run to 16k. We have also formed an ascending flat top triangle which is a generally considered a consolidation pattern prior to a breakout either up or down, and withing this structure we are completing a rounded bottom along the trend line. The 8290 level is the 0.618 retracement of the previous move between the 7900 and 9000 levels and we are consolidating nicely into the peak of the triangle. So what are we looking for as a possible trade?
A breakout of the 9000 level sets up nicely for the 9738-9840 levels which is the 0.618 extension of the previous bullish move and the 0.618 retracement of the previous bearish move. We could see a throwback so I will look to close out somewhere below the channel. If your a scalp of day trader this is probably the first setup I have seen in a while to trade BTC. However ascending triangles also break to the downside. A break to the downside I will be looking for a pullback around the 8290 level for a shorter term trade to 9740.
The long term market is still bullish and we have only completed the 3rd or 4th wave of a longer term move. The current shorter term structure is forming nicely for a bullish move and our previous targets from the last post are still valid. Sentiment is slowly changing and more and more I am hearing "should I buy here", and not "do yo think we can go lower". Sentiment drives markets in the end and clearly this is changing to the bullish direction and the chart patterns are confirming this not leading it. I do not need to turn on the weather channel to see if its raining outside, I just need to walk outside.
Bottom Line: It is not the pattern that is important, but the overall trend structure and market sentiment that is creating the pattern that is. Understand the difference. Trading is not connecting the dots, it is more important to know which dots to connect to get a clear picture.
Comment:
From the November prior to the run to 16k.
Comment:
I was writing another article when the breakout happened so this is wheret I am looking at to add. Either a breakout or a retest of the channel. I am looking longer term here but if your a scalp or day trader this is a nice setup as well. I will not have a stop limit as this is a longer term trade.
Comment:
Interesting correlation at 8:30 with bitcoin and gold after the inflation and CPI report came out at 8:30. Could we see a run to deflationary assets?
