Sideways action and complex retracement for BTC

BITFINEX:BTCUSD   Bitcoin / U.S. Dollar
BTC has been retracing recent bull run in a complex fashion since Xmas . Breakout either way is imminent, yet could take a few days, depending on the whim of a whale triggering volume or the complexity of the retracement. The question is : which strategy should be put in place to enter the next big move, and which prices for orders ?

First, let's take a look at two important levels, which are key volume triggering levels :
  • 4100 (green line) is now a huge horizontal resistance
  • 3800 (red line) is now a huge horizontal support

Then, let's consider trend lines :
  • purple and yellow lines are candidates as trend supports for a possible bull run
  • there is no serious trend line as resistance except for the 4100 and 4400 levels

Let's continue with patterns :
  • we are obviously forming an ascending triangle between ascending supports and 4100 level ( bullish )
  • we broke out of a diamond with a target higher than 4100 ( bullish )
  • I have adjusted my ascending supports more horizontally with each new higher low ( bearish ? healthy accumulation ?)
  • you all expect to read something about a famous shampoo here, so I won't say it : this pattern is useless in my opinion. Either complete (= too late) or uncomplete (= wild guess)

Let's finish with Elliott count :
  • we have a clean 12345 impulse as december 15 -> 24 bull run
  • we have an unclear retracement pattern since then : purple ABC followed by purple 12 complete ? yellow ABCDE or WXYXZ ?
  • Elliott theory suggests at least one more impulse upwards like the 15 -> 24 bull run, to complete an ABC of higher degree

Considering that oscillators and other indicators look more and more neutral to me as sideways action progresses, I am technically bullish , due to Elliott counts and patterns in play. But we are in early january, a historically bear time zone for BTC , and stocks are crashing. So, a technically unexpected breakdown could happen at any time.

Taking into account the low volumes of all this action and the undecisive behavior of BTC lately, I'm taking a neutral stance, while setting up stop orders to avoid missing the huge candle I'm expecting.

Bull scenario : 4100 finally gets broken in confident volumes, leading to an impulse upwards targeting 4400 and probably 4800. Trouble here is a fakeout followed by a massive dump. Still, I have set a stop buy order slightly above 4100 to play the huge move I'm technically expecting (= FOMO). Moreover, I'm presently in a very small long position since I favor the bullish outcome.

Bear scenario : ascending triangle fails, breaking down all bullish supports. In my opinion, breaking below last higher low of 3771 and therefore the 3800 support is a point of no return. Anything higher than that is still acceptable for the bullish case. Therefore, I have a stop sell order slightly below 3771 in place. A smarter and more conservative approach in this case would be to acknowledge the breakdown of 3771 as a bearish sign, then open a short on a confirmation of a higher low. Still, the perspective of a huge candle makes me eager to ride it (= FOMO)

Unfortunately, I don't know how to set stop-losses on Bitfinex before one of those entry points is triggered, which leaves me at the mercy of fakeouts. If you know how to activate a stop-loss AFTER another order has been triggered, I'm highly interested in your help.
Jan 04
Comment: Watching both BTC and ETH (current second market maker due to pre-fork hype) and plan to enter similar positions on ETH upon breakout.
Jan 04
Comment: ETH is market maker at this point : the end of the ascending triangle is already there. Gotta break out of it within 24h either way.
Jan 04
Comment: Errrr. Forget last comment.
Jan 04
Comment: Or not. Jeez.
Jan 05
Comment: 24 hours later, I now favor more and more the green ABCDE Elliott correction scenario. ABCDE are 33333 corrective waves associated with a triangle pattern, and everybody is currently seeing a triangle, either ascending or symmetrical.

The way you see the pattern is almost irrelevant in Elliott theory : we are correcting a bullish impulse, and therefore we expect a bullish breakout after this correction, to form a probable (A)(B)(C) on a higher time frame.

From this point of view, we are waiting for the end of the current correction, which I label as an ABCDE ascending triangle on Bitcoin, to finish the (B) wave, and expect an imminent breakout of sideways action to start (C) wave.

Now, let's look for a bearish scenario. The only SIMPLE scenario I can see is a standard ABC correction (in red) for a severe overall correction of previous bull run. I don't favor it on BTC because subcounts don't work for me on small time frames, and because we already hit the 0.618 ratio for this correction.

Yet, ETH price action has formed an ascending wedge instead of a triangle, and with same counts looks much more bearish than BTC. Since correlation is rule, I'm puzzled now.

Still in a careful long trade. Fingers crossed, and stop-losses as tight as possible while trying to avoid a fake breakdown...
Jan 05
Jan 05
Comment: More serious contender for a standard ABC correction leading us to a double bottom scenario and sideways action for next weeks is the dark red channel in the following chart. Simple, very plausible, and very bearish right now.
Jan 05
Jan 06
Trade active: I ended up placing stop entries for both outcomes. My long stop entries got triggered today for an overall 4076 entry in full long position.

Next thoughts and updates here :
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