BTCUSD: Pin Bars Appear Within Support Zone. Signs Of Reversal?

BITFINEX:BTCUSD   Bitcoin / U.S. Dollar
BTCUSD update: Lower low made at 7960 followed by a retrace and closed back within the 8656 boundary. The current candle (still open) is also showing a second pin bar off the the 8171 upper boundary of the large magnitude support zone below. I have bought more at 9202.18 (Coinbase) to add to my long position trade.

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 bearish , but this perspective changes often, while the long term (position trading, investing) is bullish 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 support zone (.618 are of broader bullish structure) and has rejected the upper boundary of the 8171 to 4983 largest magnitude support zone (.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 bullish 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.
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What is this "reversal that you are observing"? There is no recovery volume, there is only a 1D green candle on a downtrend, no different than what you've seen several times over the last few weeks and it's not even a particularly bullish candle. Also, after the lowest low you've seen since late November. Sure, it's an attractive buy area because long-term it's still a bullish market, but I wouldn't be grinning at people bragging about their shorts just yet.
+9 Reply
BRRD SafeGamble
@SafeGamble there are plenty of indicators showing a potential reversal sweet spot here, both on short and long time frames.

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.
@BRRD, perhaps you would like to share all of these indicators you say are pointing to a reversal at the present time, I see none, and it's not even oversold.

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.
BRRD SafeGamble
@SafeGamble, look for yourself... and raise your buy orders a bit.
@BRRD, if you're going to make claims that you are right and someone else is not (when you were not even addressed in the first place) you might want to support your claims. I do my own TA, you might want to do yours rather than just waste people's time just because you have nothing better to do.
BRRD SafeGamble
Take a break. Chill out. I've read your comments and even replied to a couple before and you weren't in a bad mood like this.

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.
+2 Reply
@BRRD, don't forget the falling wedge and the overwhelming negativity in media, like a couple of big profile people saying 'the bubble bursted' right at the lowest low.
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.
+1 Reply
BRRD IvanLabrie
Thanks @IvanLabrie.

We would get a colossal bounce from $5k. An amazing short-term trading opportunity, but no new ATH for a long time.
I'm sorry, @BRRD, you're right, that was harsh.

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.
Geronimo2 SafeGamble
@SafeGamble, I'm pretty sure that custom intervals are available, on TV, even for non-subscription users, unless that changed with the recent GUI update.
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?
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