Magic Eyes Bitcoin Short Entries With The Bears! (BTC)
Hi friends! Welcome to this update analysis on Bitcoin! Let's get right to it! Looking at the four hour chart, you can see that BTC continues to trade above the downtrend channel, as the bulls grind the market higher. However, I'm still concerned about the state of this breakout, and I don't particularly care to buy into it. Normally, I would buy into a bullish breakout, but in this case, I'm still neutral to bearish on the market. Yes, we've broken out above the downtrend channel, but we're still in a technical downtrend. In fact, for BTC to show that a new uptrend is forming, it would have to surpass the high from 3/21, which obviously hasn't happened yet.
With that said, the breakout has also created a formation that I have dubbed the "false flag." You can see that it's a flag formation, with a flag body that rises above the flag pole. The flag body in this formation can extend for a long duration of time, but they typically end up breaking to the downside. Obviously, all patterns fail on occasion. That is a normal function of technical analysis, and you can read about it in any piece of literature on the face of this planet. With that said, if BTC continues to rally here, it's going to run into heavy resistance at the top of the false flag. The heavy resistance that I'm referring to, is the 1200 EMA (in purple.) Here on the four hour chart, the 1200 EMA is a clone of the 200 EMA on the daily chart. As you can see, the highs from 3/21 and 3/24 were stopped cold at the 1200 EMA, so it will be interesting to see if we fail there again. The fact that we are in a bearish false flag, which is rising up toward the 1200 EMA, is a sign that the upside may be very limited right now.
Further adding to the case of uncertainty, there hasn't been any real confirmation of newly found support above the downtrend channel. Meaning, BTC never reversed to test the top of the channel after the breakout. It just broke out, and started to grind higher in this false flag. The bears never slapped it to the downside, to see where it finds support. So, I prefer to wait until either of the following events unfolds, to place a new trade.
1. I will be a buyer, if BTC breaks above the 1200 EMA, and confirms it as support. That will make me side with the bulls.
2. I will be a seller, if BTC confirms the 1200 EMA as resistance.
3. I will be a seller, if BTC tests the downtrend channel, and fails to hold it as support.
4. I will be a seller, if BTC breaks below the head and shoulders neckline (in red).
That's how I'm looking at this market. Haters will probably say "Maaaaaaaaaagic!!!! You've missed the upside on the breakooooout!" LOL I didn't miss sh1t! I've done way better than the hodlers as this market has fallen. Besides, there are plenty of other markets to trade, and that's what I do. I look for ideal setups, no matter where they are. Equities, crypto, commodities, foreign economies, I don't care. If ideal setups don't exist, I step back from that particular market, and assess it from the safety of cash.Then, I look at other markets, and make new entries when things line up. Right now, we're still in a bear market downtrend, which has produced a breakout above a downtrend channel. That breakout does not signal an end to the bear market. Knowing that, I am extremely suspicious of this breakout, and I need to see more evidence of it's legitimacy. That's called RISK MITIGATION. It's an important part of safely growing an investment portfolio. I look for high probability of success, low risk trades. At the moment, one simply does not exist in BTC. The majority of my investment assets are in stock options, and when ideal setups don't exist in crypto, I trade in the equity markets instead. With that said, if 100% of your trading portfolio is in cryptocurrencies, you're fkn up. (Haters: "tell that to the BTC investors of 2010.") Just because the investors of earlier years did well, doesn't mean that you will. Be diversified. Be smart.
With that said, the breakout has also created a formation that I have dubbed the "false flag." You can see that it's a flag formation, with a flag body that rises above the flag pole. The flag body in this formation can extend for a long duration of time, but they typically end up breaking to the downside. Obviously, all patterns fail on occasion. That is a normal function of technical analysis, and you can read about it in any piece of literature on the face of this planet. With that said, if BTC continues to rally here, it's going to run into heavy resistance at the top of the false flag. The heavy resistance that I'm referring to, is the 1200 EMA (in purple.) Here on the four hour chart, the 1200 EMA is a clone of the 200 EMA on the daily chart. As you can see, the highs from 3/21 and 3/24 were stopped cold at the 1200 EMA, so it will be interesting to see if we fail there again. The fact that we are in a bearish false flag, which is rising up toward the 1200 EMA, is a sign that the upside may be very limited right now.
Further adding to the case of uncertainty, there hasn't been any real confirmation of newly found support above the downtrend channel. Meaning, BTC never reversed to test the top of the channel after the breakout. It just broke out, and started to grind higher in this false flag. The bears never slapped it to the downside, to see where it finds support. So, I prefer to wait until either of the following events unfolds, to place a new trade.
1. I will be a buyer, if BTC breaks above the 1200 EMA, and confirms it as support. That will make me side with the bulls.
2. I will be a seller, if BTC confirms the 1200 EMA as resistance.
3. I will be a seller, if BTC tests the downtrend channel, and fails to hold it as support.
4. I will be a seller, if BTC breaks below the head and shoulders neckline (in red).
That's how I'm looking at this market. Haters will probably say "Maaaaaaaaaagic!!!! You've missed the upside on the breakooooout!" LOL I didn't miss sh1t! I've done way better than the hodlers as this market has fallen. Besides, there are plenty of other markets to trade, and that's what I do. I look for ideal setups, no matter where they are. Equities, crypto, commodities, foreign economies, I don't care. If ideal setups don't exist, I step back from that particular market, and assess it from the safety of cash.Then, I look at other markets, and make new entries when things line up. Right now, we're still in a bear market downtrend, which has produced a breakout above a downtrend channel. That breakout does not signal an end to the bear market. Knowing that, I am extremely suspicious of this breakout, and I need to see more evidence of it's legitimacy. That's called RISK MITIGATION. It's an important part of safely growing an investment portfolio. I look for high probability of success, low risk trades. At the moment, one simply does not exist in BTC. The majority of my investment assets are in stock options, and when ideal setups don't exist in crypto, I trade in the equity markets instead. With that said, if 100% of your trading portfolio is in cryptocurrencies, you're fkn up. (Haters: "tell that to the BTC investors of 2010.") Just because the investors of earlier years did well, doesn't mean that you will. Be diversified. Be smart.
Comment:
The update is here!
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-Magic loves you-
-JD-