You know when a short term low is established when members of the herd send you private messages bragging about their short positions. It is very entertaining, but more importantly serves as an excellent contrarian indicator, no different from all the buyers at 18K screaming that 30K is around the corner back in December. It does not surprise me that the first signs of stability are unfolding as I write this.
As I keep emphasizing, effective positioning begins with a perspective. The problem is there are many perspectives to choose from and they all have their own unique focal points. The short term perspective (day trading) is , but this perspective changes often, while the long term (position trading, investing) is and requires major fundamental shifts in order to change (like how interest rates affect stocks). Since I am not day trading, I am only focusing on bigger picture clues and information. This is probably one of the more difficult concepts for newer traders to understand because they are usually so focused on the immediate price action and do not know how to separate perspectives.
From the broader perspective, this market is now showing some early signs of stability. Price has managed to close within the 10988 to 8656 (.618 are of broader structure) and has rejected the upper boundary of the 8171 to 4983 largest magnitude (.618 area of entire rally from sub 150 to 20K). This price action can lead to a rally attempt, but there is no way to tell if price is going to build the next broader leg up to the major highs from here. Reasonable targets for such a rally attempt are the 10988 upper boundary of this zone, and 12565 which is the short term trend resistance at the moment.
Breaking beyond those levels will require very motivators which are possible since nothing significant has really changed in this environment. I believe the reward/risk is very attractive at these levels, in addition to the projected levels and now candle formations. The new long position that I have taken brings my average price to 10,886. Depending on how price behaves IF it makes it back to projected resistances, I will determine if it makes sense to lock in some profit or hold further. When trading on broader time horizons, there is much less precision involved but some basic rules and best practices that should always be adhered to no matter what.
In summary, the reversal that I am observing is still very small and it is possible that it can fizzle out. I am betting that there is less of a chance of that happening, but IF it does, that is okay too. I do not plan to add any more to my long after this trade. This position is definitely more aggressive, but I understand the risks involved and have sized carefully. The more conservative scenario is to wait for a higher low or failed low before taking a new long which would also serve as an attractive swing trade if you are looking for a shorter time frame exit. Risk would be measured from the 8K level. It is very easy to get sucked into the drama, and that is just human nature. There are many ways to minimized this, and that is what best practices are all about. Careful sizing, waiting for relevant levels and evaluating price action in light of the time horizon you intend to trade on are examples that lead to more rational decision making. If you find yourself confused or conflicted, it means you are not organizing your information effectively. Choose one time frame, learn what is relevant and reasonable for that magnitude, and then stick to it.
Questions and comments welcome.
The downtrend is showing decreasing volume - check Bitstamp 3-day chart for example; black swan aside Bitcoin doesn't tend to continue doing this indefinitely.
Personally I reckon there is a 35% chance of a final leg down and although I'm ready to buy it, I'm not betting it will happen.
You might also want to share how you get a 3-day chart on Bitstamp, that's definitely not an option on Trading View. In any case, we've just seen the biggest selling candle in over a month yesterday.
35%? Yes, just shoot up some random numbers, that always boosts credibility.
Anyway, seeing as you ask here are a few signs showing, as I wrote, a potential reversal sweet spot:
- on longer timeframes the daily RSI tickled 30 yesterday (I commented to @IvanLabrie a couple of weeks back that I wasn't happy with the Jan 17 low as this didn't happen).
- 200 EMA rejected so far.
- bounce happened on major trendline (set in 2017 on March 25; July 16; September 15).
On shorter time frames... well you mention candles: check out the 100k Bitcoin bought on Japanese exchange Bitflyer during a bullish 6hr reversal candle (biggest green volume bar this year) yesterday, for example.
RSI bullish divergence on the 6 hour.
There are more but maybe you should counter with some facts to support your short view.
I side with the bulls here as well, just that I'm confident this is the lowest low we will see, period. If it doesn't hold somehow, we would go to 5k anyway, so, all or nothing.
Best of luck to you all.
RSI is low, it isn't oversold. You can get it heavily oversold before it even reverts to the upside too. A bounce at the 200 EMA was to be expected: at best, it gives you an area of support, it doesn't suggest a reversal. Again, no volume, not much of a bounce either. No custom intervals on my TV version, sorry. Nothing suggests a bearish divergence on my time frames.
I'm not exactly short on it, I just don't see a recovery just yet. It seems to be going sideways for now, the market is weak. There are no indicators supporting a clear change. It just fell under $9k again, btw. Be patient.
If you select the interval selection 'down arrow' and look along the bottom edge of the drop down window, do you not have an option to enter a number, select a multiple and an 'Add' button n the bottom right hand corner?