If there is one thing that I enjoy doing in the markets, it is speculation, and I find it particularly enjoyable trying to find where the market is building liquidity, for what better reason, than to take advantage of it and make that all-important moolah! xD
BTCUSD has shown its hand and, after developing, what I would describe as a weak triple top (weak because the last leg did not really develop well), is now going down. If there is one thing we know quite well, it is that markets are fractal, and it is not unusual for markets to repeat their actions. However, all too often, we fall into the trap of seeing something so obvious that it becomes a sure sign of the manipulation that is about to occur. This obviousness is what I would equate to liquidity.
Let us break this chart down, but before I begin, I provide here a small word of warning
I AM PROBABLY WRONG
and a word of advice
WHO CARES! If we are wrong, we add the result to our journal and learn from it.
I will read the chart from left to right. So here goes! We start by seeing price accumulate with significant upwards pressure from the left. Price tried to trade downwards aggressively (11 January 2021) but closes about mid-bar. This sets the tone for a few days, and the price stays clear of that fractal low. Buyers enter the market with some belief that this is simply a pullback and the continuation will occur soon. Most traders’ stops are likely to have been below the newly formed fractal low; this builds liquidity and is traded into twice. This is important because of the significant buying volume that comes into the market and the retreat from sellers. This low of this area represents the line in the sand, in terms of our trading bias.
After this, price drives to 65000, and woopty doo, all the news headlines start screaming BUY BITCOIN! DO IT NOW! RISK IT ALL, BABY! You know that saying be "fearful when others are greedy, and greedy when others are fearful." Yep, people got greedy xD
What was the tell-tale sign that we might experience a sharp u-turn on price? For me, it was the Break of Structure; when the price broke the two previous fractal lows on the daily (19th – 26th April 2021), I had doubts about if the price would ever return to that level, price accumulated near the ICT Breaker Block, and then traded upwards to clear the previous fair value gap generated (Smart Money concept) before diving down.
Where did it stop?
It stopped right back where the previous re-accumulation area occurred. This gave us some assurance that this is a protected level and that it is improbable that we would trade past this level. This assurance was confirmed when the price accumulated and broke again to the upside, creating another area of interest which I describe as "ZONE 2." If we make a small comparison, we note that in the first re-accumulation, the largest bodied candle was the candle which broke the previous high. However, the largest bodied candle, in this move, DID NOT break the fractal high in this accumulation. WHY? I will offer my theory soon as we need to read more of the price-action.
Price then re-accumulated (first orange box), in a similar fashion to the first re-accumulation and then continued upwards to break the previous all-time high. Ok, please do me a favour, take your measuring tool, and measure the leg of the re-accumulation that created a new all-time high (57000). Now perform that exact measurement on the Re-accumulation area (67000); both moves are around 25000. If the significant players intended to break the previous all-time high, and they only had the energy to push price by around 25000 before taking a breather they would be weary because a push from the accumulation area would be fuelled by mostly their own money as they would be trading in the middle of the premium & discount area i.e. mixed market intent, and this would take price right back to a previous selling area, a brick wall and a potentially lousy chess move. So instead, the price needed to take a breather mid-range to attract more sellers into the market, creating the liquidity needed to fuel the push upwards, and thus the first push was not aggressive and the second re-accumulated area may not represent the full positions of key market participants.
So what next?
As price comes closer to ZONE 1, it is likely to consolidate and form a clear trading range; sellers will be induced into the market through perceived weakness, and buyers through false breakouts to the upside. Key market participants will slowly drip feed their BUY positions. Most sellers will be taken out by a Shakeout action (Wyckoff) which will take the price down to ZONE 2 and may trigger yet another flurry of sell positions. Zone 2 will mark the last buying area before we start trading upwards to 100k. If we fail here, this might be the start of a bear crypto market; Goodbye gains xD Nevertheless, let us be hopeful and ask ourselves when price might track upwards towards the all-important 100k level and how might this happen. I provide a theoretical model below:
If we take 25,000 as the maximum move for our conceptualisation, we can use market cycles (wyckoff) to estimate that there will be a total of five stages. I provide a timeline below
Stage 1: 30,000 → 55,000 Price will accumulate above the previous buyers' trap, creating a good base for the price to break through the previous high.
Stage 2: 55,000 → 80,000 Price will break the previous level, and greed will settle in
Stage 3: 80,000 → 60,000 Price will drop aggressively to complete the market cycle and fuel quick-exit selling and fear.
Stage 4: 60,000 → 75,000 Price will begin a slow move upwards but will not break the Stage 3 highs.
Stage 5: 75,000 → 100,000 Price will reach 100,000 and form another head and shoulder pattern. The left shoulder will tap 100k, and the head will induce greed. Be wary of the break of structure on the daily chart after this, and look to sell and add positions at the Stage 2 Accumulation area.
Timeframe? Well, if we look at the last five price cycles, they average approximately 75 days.
So if we assume that the average of the price cycles will stay roughly the same and assuming we have six price cycles, including the Potential Buyers trap, we get the math for five stages and adding the Buyers trap, we get 450 Days or 15 months. So, the price might hit 100k in March 2023.
Trading Plan
I believe that a dollar-cost averaging approach might yield more effective returns over the long term, we cannot be too sure that price will come down to zone 2, and thus you should still look to buy at both zones. However, the entries provided are, in my opinion, high probability, and you should either wait for Wyckoff schematic of a clear 2-3 wick rejection as seen in the previous accumulation and re-accumulation patterns.
WOW, that was long! Did you find that interesting to read? What is your opinion? Let us make our predictions now and see if they come true in 2023!
Colonel Panda Out.
BTCUSD has shown its hand and, after developing, what I would describe as a weak triple top (weak because the last leg did not really develop well), is now going down. If there is one thing we know quite well, it is that markets are fractal, and it is not unusual for markets to repeat their actions. However, all too often, we fall into the trap of seeing something so obvious that it becomes a sure sign of the manipulation that is about to occur. This obviousness is what I would equate to liquidity.
Let us break this chart down, but before I begin, I provide here a small word of warning
I AM PROBABLY WRONG
and a word of advice
WHO CARES! If we are wrong, we add the result to our journal and learn from it.
I will read the chart from left to right. So here goes! We start by seeing price accumulate with significant upwards pressure from the left. Price tried to trade downwards aggressively (11 January 2021) but closes about mid-bar. This sets the tone for a few days, and the price stays clear of that fractal low. Buyers enter the market with some belief that this is simply a pullback and the continuation will occur soon. Most traders’ stops are likely to have been below the newly formed fractal low; this builds liquidity and is traded into twice. This is important because of the significant buying volume that comes into the market and the retreat from sellers. This low of this area represents the line in the sand, in terms of our trading bias.
After this, price drives to 65000, and woopty doo, all the news headlines start screaming BUY BITCOIN! DO IT NOW! RISK IT ALL, BABY! You know that saying be "fearful when others are greedy, and greedy when others are fearful." Yep, people got greedy xD
What was the tell-tale sign that we might experience a sharp u-turn on price? For me, it was the Break of Structure; when the price broke the two previous fractal lows on the daily (19th – 26th April 2021), I had doubts about if the price would ever return to that level, price accumulated near the ICT Breaker Block, and then traded upwards to clear the previous fair value gap generated (Smart Money concept) before diving down.
Where did it stop?
It stopped right back where the previous re-accumulation area occurred. This gave us some assurance that this is a protected level and that it is improbable that we would trade past this level. This assurance was confirmed when the price accumulated and broke again to the upside, creating another area of interest which I describe as "ZONE 2." If we make a small comparison, we note that in the first re-accumulation, the largest bodied candle was the candle which broke the previous high. However, the largest bodied candle, in this move, DID NOT break the fractal high in this accumulation. WHY? I will offer my theory soon as we need to read more of the price-action.
Price then re-accumulated (first orange box), in a similar fashion to the first re-accumulation and then continued upwards to break the previous all-time high. Ok, please do me a favour, take your measuring tool, and measure the leg of the re-accumulation that created a new all-time high (57000). Now perform that exact measurement on the Re-accumulation area (67000); both moves are around 25000. If the significant players intended to break the previous all-time high, and they only had the energy to push price by around 25000 before taking a breather they would be weary because a push from the accumulation area would be fuelled by mostly their own money as they would be trading in the middle of the premium & discount area i.e. mixed market intent, and this would take price right back to a previous selling area, a brick wall and a potentially lousy chess move. So instead, the price needed to take a breather mid-range to attract more sellers into the market, creating the liquidity needed to fuel the push upwards, and thus the first push was not aggressive and the second re-accumulated area may not represent the full positions of key market participants.
So what next?
As price comes closer to ZONE 1, it is likely to consolidate and form a clear trading range; sellers will be induced into the market through perceived weakness, and buyers through false breakouts to the upside. Key market participants will slowly drip feed their BUY positions. Most sellers will be taken out by a Shakeout action (Wyckoff) which will take the price down to ZONE 2 and may trigger yet another flurry of sell positions. Zone 2 will mark the last buying area before we start trading upwards to 100k. If we fail here, this might be the start of a bear crypto market; Goodbye gains xD Nevertheless, let us be hopeful and ask ourselves when price might track upwards towards the all-important 100k level and how might this happen. I provide a theoretical model below:
If we take 25,000 as the maximum move for our conceptualisation, we can use market cycles (wyckoff) to estimate that there will be a total of five stages. I provide a timeline below
Stage 1: 30,000 → 55,000 Price will accumulate above the previous buyers' trap, creating a good base for the price to break through the previous high.
Stage 2: 55,000 → 80,000 Price will break the previous level, and greed will settle in
Stage 3: 80,000 → 60,000 Price will drop aggressively to complete the market cycle and fuel quick-exit selling and fear.
Stage 4: 60,000 → 75,000 Price will begin a slow move upwards but will not break the Stage 3 highs.
Stage 5: 75,000 → 100,000 Price will reach 100,000 and form another head and shoulder pattern. The left shoulder will tap 100k, and the head will induce greed. Be wary of the break of structure on the daily chart after this, and look to sell and add positions at the Stage 2 Accumulation area.
Timeframe? Well, if we look at the last five price cycles, they average approximately 75 days.
So if we assume that the average of the price cycles will stay roughly the same and assuming we have six price cycles, including the Potential Buyers trap, we get the math for five stages and adding the Buyers trap, we get 450 Days or 15 months. So, the price might hit 100k in March 2023.
Trading Plan
I believe that a dollar-cost averaging approach might yield more effective returns over the long term, we cannot be too sure that price will come down to zone 2, and thus you should still look to buy at both zones. However, the entries provided are, in my opinion, high probability, and you should either wait for Wyckoff schematic of a clear 2-3 wick rejection as seen in the previous accumulation and re-accumulation patterns.
WOW, that was long! Did you find that interesting to read? What is your opinion? Let us make our predictions now and see if they come true in 2023!
Colonel Panda Out.
