As we complete a 3rd leg of the correction, many focusing on smaller time frame charts are miss-led by the patterns they see that often form randomly. Wyckoff spoke of this in his 1937 book. YES 1937! If you want to be a better trader, a better investor, stop following 1-2-4 hour chart patterns.
Think of it as if you were going to buy a lemonade stand. Would you buy the business based on how many lemonades were sold in 48 hours? Of course not. You would want to see months (with an s) of data. Looking at sales in such a small time frame could be misleading and with charting it is simply no different. Proof in point.
What has changed on my chart over the past 21 days? NOTHING. This is because I am focused on the order flow over a broader period of time. I am judging the market based on weeks and months of data, not 48 - 72 hours worth. Ok in fairness I drew a trend channel, added some EW letters, and updated the days.
Technical:
Currently Bitcoin is forming a bullish flag continuation pattern which can unfold as a 3, 5 or 7+ leg structure. Three leg structures can often be deceiving especially during broader consolidations in the scheme of things. This could be the end, or we could continue to consolidate. We simply do not know how the market will unfolds and all we can do is prepare for multiple scenarios.
Price has reacted, for the most part, within our consolidation channel and as mentioned weeks ago, has faked out shorts twice now at proportional levels one would look for fake-outs. Except the shorts who seem to fall for it time after time. Some crystal ball magic? NO just understanding of the broader structure, order flow and experience. Do we know where price will go from here? NO But we do have a plan!
The same calling for 20-30-60k only a few weeks ago, are now calling for a major pullback. Possible but not likely here. There are numerous reasons why we do not think Bitcoin takes out the 8500 level. You will not find this information on a 2 hour chart. Its like looking for a diamond in a pile of pig crap. To be clear we don't discount it, we just think it is a low probability. So why do we discount it as a lower probability?
Magical Mabit Level:
One reason we remain bullish is Bitcoin rejected the 45% Mabit retrace level ($9050) quickly. Yes my secret and highly proprietary Mabit level that I just shared with the world. How did I come to calculate this "magical" level. It is the growth rate of a Mabit, or a cross between a Mussel and a Rabbit.
Now the type of mussel and rabbit does matter. Is it a blue mussel crossed with Lop (45%), or a Zebra mussel crossed with a Jersey (42.8%)? Gosh I can't believe people still fall for "magical" retrace levels. Mostly because they do not understand what Fibonacci and other similar proportional levels imply.
These types of proportional levels provide insight as to how the market is reacting during pullbacks. It also provides some insight as a projection to future potential levels based on the strength of a market. Not much magic here.
Pretty much strong markets have shallow pullbacks and rally higher. These levels just provide some proportion to the move and where we look for order flow to stall or pick back up. In the end, price action is all that counts and this will NOT be found on a Fibb diagram.
If a market pulls back 30% of the previous swing, do we see buyers step in? IF they do, then this is a sign that buyers are still looking to add or enter. So what does pulling back midway between the 38.2 and 50% retrace levels imply? By the way the 50% retrace is NOT a Fibb level it is from Gann Retracement Theory. Hate to break it to you Fibbers, Gann was a predecessor of Fibb.
Holding the 50% retrace is a sign of a strong market not a weak one. Strong markets generally do not give back more than 50% of the previous move. The phenomenon is not because Pluto aligned with Uranus, it is because participants are buying the dip. Yes it is that simple order flow is still to the buy side.
The market also pushed back through the 10k level which is a psychological level (not magical) where it is currently consolidating. In the end all we care about is the strength of order flow.
Order flow is pointing to buyers stepping in on dips below 10k, as we pointed out two months ago in the article "buy the dip and put it away, the path is clear to 24k". Boy I love still going over the troll comment there, and yet they still appear to troll when they finally are right, which is seldom. You think they bought yet or are waiting for 20k?
I have modified the 24k level somewhat so lets zoom out.
We have an initial motive wave on the monthly. YES the monthly chart. What is bearish about this chart? We bounced right off the broader trend line, that suddenly appeared out of nowhere? I was amazed how it was "suddenly revealed", like a revelation of sorts, though it has been on there since 2017. It was only hidden if you were focused on a 2 hour chart.
Many missed this initial move, or want to add to their current inventory accumulating into dips. This leads to less supply and more demand, which in return drives prices higher. I mean I am not selling what I bought back in February are you? I'm looking to buy the dip! I have for transparency purposes.
This natural market phenomenon leads to less float and more demand (Not Magic) as those who missed out are now turning bullish and want in (Not Magic and very much anticipated).
Regardless we are in a broader bullish trend full of motive and consolidation cycles starting in 2010. Motive legs are followed by a period of consolidation before the next motive wave. We are simply positioning for the next motive wave which we anticipate to be impulsive and move higher.
The weekly chart provides some additional insight. The "potential" formation of a pinbar on a weekly chart would suggest weak hands were pushed out of the market, and buyers quickly stepped in. This is why the pattern forms. Nothing astrological here. Does it matter if it happened on Monday after fasting over the weekend during a lunar eclipse? NO.
Like the lemonade stand we are seeing weeks and months of data, not 48 hours worth. Like buying a business we want to see strength in the longer term, not what the stand did in sales Thursday and Friday.
Which is more indicative of the actual market? The 2-4 hour chart or the weekly and monthly?
Market Timing Gambling Fools:
Selling your inventory, getting scared out of a position, or buying because of a triangle on a 4 hour chart after a half moon cycle on a rainy Thursday is foolish. Yet the market is full of fools. Sure even fools are right some times but a fool and his money will soon be departed. Or they often take a month or so off posting on TV.
Did we time every market move perfectly? NO because shorter term price action is random. Our focus has always been on the long game. Which is why during 2018 I pounded the table that this was a buying opportunity for the long term. 8k,6k,4k,3500 were all buying opportunities if you could discipline yourself to ignore the noise. So if it is so easy why doesn't everyone do it?
Emotional discipline!
Few have the emotional discipline to take the long road and soon regret when the time passes and they didn't do it. The lure of instant gratification, following the herd, blinds many to what is actually going on.
Though prices can fluctuate in the near and short term, you can not hide the order flow of the broader picture. Price action is telling that money is still flowing in. Those trying to time the market with their portfolios are simply gambling and hoping they are right. When your strategy is based on hope its a hopeless strategy.
Sure you will see them brag when they sold their portfolio out at one point and it worked out. The worst thing that can happen is it works the first time. Eventually you will miss a move and this is when the Rooster comes back to roost.
Still a lot of noise:
Three weeks into a consolidation there is still a lot of noise. One day the market is going to sell off, the next its a big rally. However we are right where we thought we would be and the market is acting as we anticipated. It did not have to act this way, but probabilities leaned to this direction.
Probabilities are based on logical analysis, not triangles on charts. Sticking with probabilities will have you on the right side of the fence more often than looking at the greener pastures on the other side.
Yet I see people posting "I sold my positions at 10k it is selling off". How is that working out? Sure we may pullback to 8500 where you can add, or even 7100 at the 61.8% retrace, and you look like a genius, but the market does not give a crap about Fibbs and it makes most look like fools. If it doesn't pullback you were simply another fool thinking you can time your long term portfolio with short term price action.
Seeing buyers step in at a 20-30-40% dip in a bullish market is a sign and an opportunity in my opinion. Especially since we are still around 50% off the ATH.
Looking at the broader picture the probabilities favor higher prices. Understanding that markets, like poker, are nothing more than probabilities. This is important to understand. We are still in the consolidation channel. Wow imagine that! Nothing has changed and nothing magical about it. It was just the most probable outcome.
Is the Low In?
I don't know and neither does anyone else. I do know where we plan on adding depending on how the market unfolds. I do know that rejecting the "non magical" 50% retrace was a positive sign. I do know that those flip flopping like fish on a dock have no idea of what they are doing.
So the drama continues, and like drama queens (or kings) many fall for the hype. Those posting art projects on 2 hour time frames, of which are more abstract art than TA are simply looking for something to confirm their opinions which changes day to day.
Yes there are some decent charts here on TV, you know the guys (and gals) that do not disappear for months when they are wrong, only to come back and claim victory. They post consistently and do not coward and make excuses when they are wrong.
In the end do not fall for the drama queens of crypto and do not confuse a genius with a bull market.
Ignore the noise and focus on the broader picture. Ignore snake oil salemen (and snake oil women) that claim to have some magical method that foresees the future. You really think someone has a magical indicator or knows some magical retrace level? You really think someone can point to broader term price moves on a 2-4 hour chart? You really think something has changed in the last 3 weeks?
In general ignore the noise around you because nothing has changed. We are simply consolidating. Nothing more and nothing less.
Magical I know!
Can't wait to see the art renditions in the comments below.
Think of it as if you were going to buy a lemonade stand. Would you buy the business based on how many lemonades were sold in 48 hours? Of course not. You would want to see months (with an s) of data. Looking at sales in such a small time frame could be misleading and with charting it is simply no different. Proof in point.
What has changed on my chart over the past 21 days? NOTHING. This is because I am focused on the order flow over a broader period of time. I am judging the market based on weeks and months of data, not 48 - 72 hours worth. Ok in fairness I drew a trend channel, added some EW letters, and updated the days.
Technical:
Currently Bitcoin is forming a bullish flag continuation pattern which can unfold as a 3, 5 or 7+ leg structure. Three leg structures can often be deceiving especially during broader consolidations in the scheme of things. This could be the end, or we could continue to consolidate. We simply do not know how the market will unfolds and all we can do is prepare for multiple scenarios.
Price has reacted, for the most part, within our consolidation channel and as mentioned weeks ago, has faked out shorts twice now at proportional levels one would look for fake-outs. Except the shorts who seem to fall for it time after time. Some crystal ball magic? NO just understanding of the broader structure, order flow and experience. Do we know where price will go from here? NO But we do have a plan!
The same calling for 20-30-60k only a few weeks ago, are now calling for a major pullback. Possible but not likely here. There are numerous reasons why we do not think Bitcoin takes out the 8500 level. You will not find this information on a 2 hour chart. Its like looking for a diamond in a pile of pig crap. To be clear we don't discount it, we just think it is a low probability. So why do we discount it as a lower probability?
Magical Mabit Level:
One reason we remain bullish is Bitcoin rejected the 45% Mabit retrace level ($9050) quickly. Yes my secret and highly proprietary Mabit level that I just shared with the world. How did I come to calculate this "magical" level. It is the growth rate of a Mabit, or a cross between a Mussel and a Rabbit.
Now the type of mussel and rabbit does matter. Is it a blue mussel crossed with Lop (45%), or a Zebra mussel crossed with a Jersey (42.8%)? Gosh I can't believe people still fall for "magical" retrace levels. Mostly because they do not understand what Fibonacci and other similar proportional levels imply.
These types of proportional levels provide insight as to how the market is reacting during pullbacks. It also provides some insight as a projection to future potential levels based on the strength of a market. Not much magic here.
Pretty much strong markets have shallow pullbacks and rally higher. These levels just provide some proportion to the move and where we look for order flow to stall or pick back up. In the end, price action is all that counts and this will NOT be found on a Fibb diagram.
If a market pulls back 30% of the previous swing, do we see buyers step in? IF they do, then this is a sign that buyers are still looking to add or enter. So what does pulling back midway between the 38.2 and 50% retrace levels imply? By the way the 50% retrace is NOT a Fibb level it is from Gann Retracement Theory. Hate to break it to you Fibbers, Gann was a predecessor of Fibb.
Holding the 50% retrace is a sign of a strong market not a weak one. Strong markets generally do not give back more than 50% of the previous move. The phenomenon is not because Pluto aligned with Uranus, it is because participants are buying the dip. Yes it is that simple order flow is still to the buy side.
The market also pushed back through the 10k level which is a psychological level (not magical) where it is currently consolidating. In the end all we care about is the strength of order flow.
Order flow is pointing to buyers stepping in on dips below 10k, as we pointed out two months ago in the article "buy the dip and put it away, the path is clear to 24k". Boy I love still going over the troll comment there, and yet they still appear to troll when they finally are right, which is seldom. You think they bought yet or are waiting for 20k?
I have modified the 24k level somewhat so lets zoom out.
We have an initial motive wave on the monthly. YES the monthly chart. What is bearish about this chart? We bounced right off the broader trend line, that suddenly appeared out of nowhere? I was amazed how it was "suddenly revealed", like a revelation of sorts, though it has been on there since 2017. It was only hidden if you were focused on a 2 hour chart.
Many missed this initial move, or want to add to their current inventory accumulating into dips. This leads to less supply and more demand, which in return drives prices higher. I mean I am not selling what I bought back in February are you? I'm looking to buy the dip! I have for transparency purposes.
This natural market phenomenon leads to less float and more demand (Not Magic) as those who missed out are now turning bullish and want in (Not Magic and very much anticipated).
Regardless we are in a broader bullish trend full of motive and consolidation cycles starting in 2010. Motive legs are followed by a period of consolidation before the next motive wave. We are simply positioning for the next motive wave which we anticipate to be impulsive and move higher.
The weekly chart provides some additional insight. The "potential" formation of a pinbar on a weekly chart would suggest weak hands were pushed out of the market, and buyers quickly stepped in. This is why the pattern forms. Nothing astrological here. Does it matter if it happened on Monday after fasting over the weekend during a lunar eclipse? NO.
Like the lemonade stand we are seeing weeks and months of data, not 48 hours worth. Like buying a business we want to see strength in the longer term, not what the stand did in sales Thursday and Friday.
Which is more indicative of the actual market? The 2-4 hour chart or the weekly and monthly?
Market Timing Gambling Fools:
Selling your inventory, getting scared out of a position, or buying because of a triangle on a 4 hour chart after a half moon cycle on a rainy Thursday is foolish. Yet the market is full of fools. Sure even fools are right some times but a fool and his money will soon be departed. Or they often take a month or so off posting on TV.
Did we time every market move perfectly? NO because shorter term price action is random. Our focus has always been on the long game. Which is why during 2018 I pounded the table that this was a buying opportunity for the long term. 8k,6k,4k,3500 were all buying opportunities if you could discipline yourself to ignore the noise. So if it is so easy why doesn't everyone do it?
Emotional discipline!
Few have the emotional discipline to take the long road and soon regret when the time passes and they didn't do it. The lure of instant gratification, following the herd, blinds many to what is actually going on.
Though prices can fluctuate in the near and short term, you can not hide the order flow of the broader picture. Price action is telling that money is still flowing in. Those trying to time the market with their portfolios are simply gambling and hoping they are right. When your strategy is based on hope its a hopeless strategy.
Sure you will see them brag when they sold their portfolio out at one point and it worked out. The worst thing that can happen is it works the first time. Eventually you will miss a move and this is when the Rooster comes back to roost.
Still a lot of noise:
Three weeks into a consolidation there is still a lot of noise. One day the market is going to sell off, the next its a big rally. However we are right where we thought we would be and the market is acting as we anticipated. It did not have to act this way, but probabilities leaned to this direction.
Probabilities are based on logical analysis, not triangles on charts. Sticking with probabilities will have you on the right side of the fence more often than looking at the greener pastures on the other side.
Yet I see people posting "I sold my positions at 10k it is selling off". How is that working out? Sure we may pullback to 8500 where you can add, or even 7100 at the 61.8% retrace, and you look like a genius, but the market does not give a crap about Fibbs and it makes most look like fools. If it doesn't pullback you were simply another fool thinking you can time your long term portfolio with short term price action.
Seeing buyers step in at a 20-30-40% dip in a bullish market is a sign and an opportunity in my opinion. Especially since we are still around 50% off the ATH.
Looking at the broader picture the probabilities favor higher prices. Understanding that markets, like poker, are nothing more than probabilities. This is important to understand. We are still in the consolidation channel. Wow imagine that! Nothing has changed and nothing magical about it. It was just the most probable outcome.
Is the Low In?
I don't know and neither does anyone else. I do know where we plan on adding depending on how the market unfolds. I do know that rejecting the "non magical" 50% retrace was a positive sign. I do know that those flip flopping like fish on a dock have no idea of what they are doing.
So the drama continues, and like drama queens (or kings) many fall for the hype. Those posting art projects on 2 hour time frames, of which are more abstract art than TA are simply looking for something to confirm their opinions which changes day to day.
Yes there are some decent charts here on TV, you know the guys (and gals) that do not disappear for months when they are wrong, only to come back and claim victory. They post consistently and do not coward and make excuses when they are wrong.
In the end do not fall for the drama queens of crypto and do not confuse a genius with a bull market.
Ignore the noise and focus on the broader picture. Ignore snake oil salemen (and snake oil women) that claim to have some magical method that foresees the future. You really think someone has a magical indicator or knows some magical retrace level? You really think someone can point to broader term price moves on a 2-4 hour chart? You really think something has changed in the last 3 weeks?
In general ignore the noise around you because nothing has changed. We are simply consolidating. Nothing more and nothing less.
Magical I know!
Can't wait to see the art renditions in the comments below.
Comment:
For transparency we were long from 10,100 as a swing trade and have faded this pullback in our long term inventory.
Comment:
Regardless of shorter term time frames that show a lot of noise, the daily has just been a slow drip lower. It is NOT falling apart here it is just grinding lower.
There are a lot of support levels in this area including the famous 61.8% retrace which overlaps with several other extensions, retraces and traditional support levels, so we will WAIT and see how the market reacts here.
IF we take out 9500 the 8500 level is the next major level of support. In short there is nothing to do here period but wait. Patience to let the market play out, and discipline to not react to intra-day price action is important for being profitable in the long term regardless of your strategy.
Regardless of shorter term time frames that show a lot of noise, the daily has just been a slow drip lower. It is NOT falling apart here it is just grinding lower.
There are a lot of support levels in this area including the famous 61.8% retrace which overlaps with several other extensions, retraces and traditional support levels, so we will WAIT and see how the market reacts here.
IF we take out 9500 the 8500 level is the next major level of support. In short there is nothing to do here period but wait. Patience to let the market play out, and discipline to not react to intra-day price action is important for being profitable in the long term regardless of your strategy.
