DIGITAL-ALPHA

DIGITAL ALPHA UPDATE BTC - Time for Tea

BITFINEX:BTCUSD   Bitcoin / U.S. Dollar
Happy weekend everyone!

After the short squeeze we all witnessed yesterday, I've come to a new conclusion on how I see BTC 2.56% playing out for the next 3-5 months. I will warn you, it is boring. Like major boring...So take some time, drink some tea, have a beer, sleep in, enjoy your summer, do not stress. Just position yourself for the long-haul and wait for the boom...

So my new thinking is this. We will get less volatility and more sideways movement with squeezes in between. Next rejection at dashed blue line ($7750) will result in a test at the very long-term support of $5.5k. Most transactions will occur off the major exchanges in order for the squeezes to continue. Eventually we will start to see a cup formation happen. The major indication for a cup formation will be volume , BUT it won't be on exchanges. We need to start watching the blockchain to monitor volume . Once the various NEW players have substantial bags, we will start to hear the news. This news will be in the realm of ETF approval, brokerage services adding BTC 2.56% , aka anything that tells the public institutions approve.

The angles with degrees shown within the pattern show the progression as well. The steepness is declining. After price hit support the action has lessened by 10 degrees each time. When price moved from the resistance the angle changed by 17 or 18 degrees. So using this continuation we arrive at about $7750 and then $5500. yawn...

However, to prepare yourself for the next bull run we need to look at volume ...and looking at volume of BTC 2.56% being moved around will help with this. If anybody has a good way to measure this, please PM me.

Enjoy the weekend!

DA "bear" BULL
Comment: above is a link showing transaction history in amount of BTCs on the blockchain since January 1st.
Comment: Retraced 0.5 using fib levels. This corresponds with a support line. Look to enter a long here for the push to $7.5k (using 1.618 fib extension) - $7.8k (using blue dashed resistance).

Comment: Ok, the inverse head and shoulders (iH&S) if it plays out would happen in this area. You can see our price point of $7.8k would be in the cards still. Breakouts for iH&S formations are the distance between the neckline (resistance) and the lowest point of the head. Take that distance and measure from the breakout point at the neckline. Many experienced traders will wait for the breakout and price to test the neckline as support before entering a trade. This low liquidity environment has me on the sidelines. iH&S if you look at the previous iH&S's that have formed since the peak, they rarely work out, which is why I'm on the sidelines. For those looking to try this trade, you do have the volume profile in your favor.

If iH&S plays out $7.8k is in the cards. I placed a darker line below this price point, you can see there was previous resistance here. This would be a more conservative exit.

Comment: Still progressing at the original target and angle.

Comment: During this triangle we have been double topping. Look for this minor correction to continue before touching upper resistance (based on prev. history). Keep in mind that many in the market are starting to believe in this $7.8k. I mention this because if we start to see the shorts stack up near this resistance we can see a very fast push to $8.4k before starting the downward trend to liquidate.

Comment: We are seeing some very bullish buying here near the resistance. My plan is more of a wait and see right now. The talk of a quick short squeeze near this resistance appears to be void since we are seeing Longs stacking up.


Keep in mind this can always flip quick, which is why I'm more of a wait and see. It is a long way down to $5.5k and will have plenty of time to jump on the ride.


I'd say we were just about spot on for time and price...
Comment: The longs disappeared yesterday as expected.


Keep in mind that the amount of wallets actively trading is decreasing (consolidating) even though volume is climbing. The ETF is very bullish news, but I still think we revisit the lows. Expect the news to talk about the SEC delaying their response and spinning it as BTC doom and gloom. An ETF will happen. The CBOE is providing insurance to their investors, which will limit the risk that the SEC has continually been discussing. The delayed response is not the CBOE, butone of the other 5 ETF proposals that are out there. I will update the time projection for the low if price enters the triangle again.
Comment: Here is a chart that everybody should know about. The area we are at is big. If BTC somehow goes bullish, take note. We are testing some significant areas. If we get a rejection than this chart remains valid. If BTC goes bullish through these MAs, we will re-consider our stance on BTC. Take a look:

Comment: Winklevoss twins BTC ETF rejected by SEC. Let the reactions begin.
Comment: Look for price to approach old resistance (blue hashed line) and bounce a bit. This area will correspond with the 100MA tomorrow. The 100MA tends to be an area of some resistance/support where price goes sideways. For the scalpers look for a potential closing of a short in this area to re-open higher. Our long-term target is sub $6k still.

Comment: We got the bounce we were expecting. After touching the 100MA and blue dashed line price hit $7.7k. BTC is now headed back down towards the blue hashed line (long-term resistance) to test as support again. If the prior resistance does not hold as support the next target would be near $6.8k, which will correspond with the 50MA. Even though I am bearish in this progression I feel that we are moving faster through this leg than expected. We could see some sideways for a few days soon. A move up after re-testing the blue-hashed line as support would make sense here as well, meaning a test of the 200MA near $8k.

Comment: drop is starting, looking for 6815 here.

Comment: ETF delayed 45 days
Comment: Negative delay news about ETF should get us to $6800...I'm actually even more bearish than that, but let's wait to see what happens after a little before getting TOO dramatic.

Stay tuned for my update on my Gold BTC overlay chart...I have something very interesting to share.

Comment: Looks like the bearishness was warranted. Looking at the situation it appears a fast selloff is imminent. The speed at which we are moving suggests the bottom will be found in a volatile manner soon. Don't attempt to catch this knife unless you wish to ladder in buys. See if we get a little recovery here before trying to enter. AND always be aware when shorts stack up like this a short squeeze (aka bounce) will happen.
Comment: First target is $5.5k, next is $4.5k. $4.5k is as bearish as my charts allow me to go for now.
Comment: That was fun. Here we are sub $6k. We got a nice bounce at $5950. I'm sorry I was not able to post more. My recent target was $5975 and I wish I had shared. Anyways, here we are at $6k, look at the short/long development. We are in squeeze territory.

Comment: Shorts still increasing! Yet price is still moving up. Path of least resistance is upwards. Once these contracts start getting margin called you'll see a fast movement upwards. Due to the low liquidity the price targets can vary. Several are $6730 (100MA), $7170 (200MA), $6950 (based on VPVR, prior volume nodes), $7330 (another high volume node). Based on what I see the $6950 target looks best, so I'll try to creep in just under there. Good luck here, we are in some choppy waters now!

Comment: The magenta lines are the targets I describe. The VPVR is the graph on the right hand side of the chart. I didn't have time to remove all my dashed lines, which are prior resistances/supports. The reason I say the $6950 looks best is because the 0.382 retracement fib line is $6850, which corresponds to the high volume node around $6950. My philosophy is that charting is bogus BUT so many people follow it that it's self fulfilling. The key is to see what bogus metric is being followed the most based on the asset you are following. So with BTC there tends to be a following around volume nodes, fib retracements, and MAs. So if price targets agree with say 3 of the 4 tools, then my guess is about 75% of the TAs out there think the same. My goal in TA is to figure out what the other TAs are thinking and what pods of Whales are thinking. Good luck!

Comment: $6900 hit on bitfinex, so time to look at the next movement. Short contracts were reduced by about 10% on bitfinex and longs went up. On Bitmex shorts were wiped clean. This means we are now ready to go low. Note the fractals here. I'm watching that white supporting line which is the long-term support (two year support).

Comment: Alts have pumped here and there while BTC has steadily risen. Note that Large Cap Alts have hardly moved (ETH, LTC). When you see ETH start dropping that will signal a drop for BTC. That type of behavior signals money moving from alts to BTC. The next move is from BTC to USDT or fiat. Hopefully you are having fun watching paint dry this week.

Also, here is some MACD analysis. Based on previous instances we can expect a dip here before moving up...just note history does not guarantee future outcomes! Take it easy.

Comment: Time to place your bets if you wish to have a spin here! Testing blue hashed line. We have been forming an ascending triangle, which is usually bullish, so my expectation is a rise to 6900-7400 before continuing its bearish trend. However, we can also just bounce downward here...this to me would mean this downward leg is moving very quickly as mid to late September is where I originally believed our next bottom would be found.

Comment: Ignore the blue and yellow lines. They are just indicators for me that show when the peak in volume tx activity happened (blue) and when the low happened (yellow). The low periods tend to bracket accumulation areas during a downward leg...so waiting for the next low tx day to happen.
Comment: Let's not forget our long-term prospective. Please keep this in mind as we progress day to day.

Comment: What to watch out for in the next 24 hours is the confluence at $6740?

BTC has several important resistance/supports lining up. We have the blue dashed line, looking at the chart above we can see the long-term significance. We have the white line going horizontal that is just above a high volume node and has proved to be important as the price acted as support to move towards $7k+ levels. Additionally, we have the white dashed support of the current ascending wedge formation. Using this style we can view two of the more popular trading methods (trading based on volume nodes/supports and chart patterns) and how they join. This also helps us figure out the potential timeline as to when it might happen.

ALSO, go use your Ichi clouds and see where your Senkou Span/Cloud starts...should be in the same area if you adjusted your cloud settings to crypto friendly times. I bring this up because many people trade using these methods, so if you know what the average trader is using and can match up a point in time where several methods join...you have a great opportunity to make a profit.

One last point, when we jumped out of the blue hashed triangle, it was less than 5%...bearish. It is a failed breakout meaning there is a high chance of price reversal. So let's watch what happens here at $6740. My money is on a little bounce followed by some fast price action. When that happens, use the long-term perspective shown above. Good luck!

Comment: So the close of the CME Futures, which corresponded to that area to watch on my previous chart, resulted in a price bounce. We got a healthy bounce. My personal belief was we would have then gown down, but instead we went up 100+ within the hour. Price is still tracking within the ascending wedge and is currently testing the upper resistance. Longs are now at 55% while shorts are 45%. RSI is overbought and even the market buys are much larger than normal (here: https://www.turtlebc.com/tools/buy_perce...). I'm still bearish. My next area to watch will be the magenta line around $7400 if we keep going up in this wedge. If we blow past this point then the less pronounced blue dashed line will be next, but I'll get into that if needed. If we see a reversal I would expect a test of $6k to happen relatively fast.

https://www.turtlebc.com/tools/buy_perce...
Comment:
Comment: $7400 price point was where we reversed. Here is what you can expect. Magenta is support. Look for confirmation before opening a position if you have not already. Watch this bounce here. We need confirmation that we are breaking downwards out of the wedge before we can be certain.

Comment: Well that was fun! Hope you guys were in a position to enjoy that short. We are expecting some sideways here. The magenta box is the range we are expecting. The magenta lines are resistances/supports where if you want to play this range, consider opening positions at those places. Since we started this trade idea we have had our eyes set on Sept 24th. If price stays in this range expect price to still respect that blue dashed line. We are still bearish mid-term and do expect BTC to touch the solid white support line (in original chart) near $5.5k. IF BTC does this and bounces upwards we can begin to consider bullish sentiment. However, we still have time before we need to consider. For now, just expect some sideways. If you were a bottom shorter and are considering to keep your position open, just remember, how much am I paying to keep a position open for a day? a week? 10 days? This might be enough consideration for you to close, wait for a $6.6k touch to re-open your position. Just some food for thought.

Comment: OK, the 24th has come and gone. The price was falling, but did not have the volatility that we were all expecting...instead we have seemed to have turned a corner here. Note the chart below. It is time we start looking for some bullish signs now as the sentiment winds may be changing soon (think bakkt).

Comment: Also, this appears to be in play. The ABCDE triangle looks to be adding a few more touches before going north of $7k.

Trade closed: target reached

Comments

thanks to @s3cr3t44 for brings this up. Keep this in mind as whales continue to fight to hold $8k:

https://www.ccn.com/crypto-market-rebounds-bithumb-drives-kimchi-premium-up-50/

Takeaway - "Over the last 24 hours, bitcoin has rebounded by around 3.5 percent, but the recovery of the market was not triggered by the rise in bitcoin’s value, but rather by the inflation of digital asset prices by Bithumb"
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awesome notificiation timing is well thank you
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YOu have any link to that last ETF statement?
+1 Reply
@s3cr3t44, just added, let's see what happens now
+1 Reply
s3cr3t44 DIGITAL-ALPHA
@DIGITAL-ALPHA, Thx just shorted
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Excellent analysis! Very intelligent of you to step out of the box and analyze the blockchain for volume. Thx
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You're the only analyst I've seen so far (on TV at least) that has addressed the off exchange volume. It is imo the biggest factor allowing the control of this market to occur as tightly as it has. I largely agree with your time analysis. Hopefully by Oct-Nov we'll have the non obvious indicators in place. A lot of people are talking about how everyone got burned and all the retail boom is done for...what people fail to remember is that the majority of potential buyers during that time period were highly restricted on entry size IF they could even get set up to buy at all. This could be another hidden factor to come into play once the gates are fully open to public, of course, after the big boys have their bags ready. Good job mate.
+2 Reply
Yup, there just isn't enough money to drive this beast. Everyone who got burned at 19k, is out and so is all their friends and families. Good luck bitcoin ever reaching that moon this year or next.
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