Bitcoin Consolidation Continues in a Second Wyckoff Redist Phase
Happy Wednesday everyone. I woke this morning not only to a breakout above the Redistribution trade range this morning, but an interesting Tweet from Barry Silbert about the slides in the Goldman client call this morning as it relates to Bitcoin.
"We believe that a security whose appreciation is primarily dependent on whether someone else is willing to pay a higher price for it is not a suitable investment for our clients." - Goldman Sachs.
Looking at the Intraday Chart, the formation moved above the upper end of the trade range ($8,960) to $9,000 in an apparent Upward Thrust After Distribution (UTAD) and signaled a false buy confirmation before reversing lower. The PA broke through the floor of the lower end of the trade range, signaling a second Sign of Weakness (SOW) and fell to a low of $8,700 before turning higher.
Overnight, the formation formed double top (a bullish signal in Point and Figure) at $8,720, signaled a buy at $8,740, confirmed the buy signal at $8,760 and advanced on what appeared to be a bullish breakout. The target price of the formation on this breakout (based upon the Horizontal Count Method) should be $9,300. The formation PA advanced on weak volume to $9,180 signaling a potential high pole reversal was in play with a target price of $9,020. I would expect once the formation to retraces to the $9,020 price level, it should reverse and advance again if the bullish bias prevails.
My feeling is a bearish narrative still prevails and I would lean towards a retrace and eventual continuation of the larger Distribution pattern for a few reasons.
Looking at the 1D chart, the PA remains in a green candle. It pushed higher to $9,180 before stalling out. The current price of BTC is $9,136 as of this writing and, unless the daily closes out above $9,120 (preventing a reversal), the formation will print a lower high on the 1D.
My expectation the formation will print a lower high over the next few days remains unchanged. The formation still has room to run (up to $9,280) and can still print a lower high, but my feeling is we will visit the lower end of the 1D trade range ($8,120), retest the lower end, and potentially establish a Sign of Weakness (SOW) down towards $7,700 before reversing and moving higher again.
Always remember this is not trading advice.
Outside of that, Happy Trading.
"We believe that a security whose appreciation is primarily dependent on whether someone else is willing to pay a higher price for it is not a suitable investment for our clients." - Goldman Sachs.
Looking at the Intraday Chart, the formation moved above the upper end of the trade range ($8,960) to $9,000 in an apparent Upward Thrust After Distribution (UTAD) and signaled a false buy confirmation before reversing lower. The PA broke through the floor of the lower end of the trade range, signaling a second Sign of Weakness (SOW) and fell to a low of $8,700 before turning higher.
Overnight, the formation formed double top (a bullish signal in Point and Figure) at $8,720, signaled a buy at $8,740, confirmed the buy signal at $8,760 and advanced on what appeared to be a bullish breakout. The target price of the formation on this breakout (based upon the Horizontal Count Method) should be $9,300. The formation PA advanced on weak volume to $9,180 signaling a potential high pole reversal was in play with a target price of $9,020. I would expect once the formation to retraces to the $9,020 price level, it should reverse and advance again if the bullish bias prevails.
My feeling is a bearish narrative still prevails and I would lean towards a retrace and eventual continuation of the larger Distribution pattern for a few reasons.
- When looking at the consolidation period and the recent breakout, there is a bearish divergence on the Volume Oscillator, which suggests a low/declining volume on the price advance. Also, a value below zero (-15.92%) on the breakout signals a potential trend shift incoming - both bearish indicators.
The advance did not hit the target price based upon the cause built from the congestion in the formation before turning lower. Furthermore, the advance was reversed just below a major resistance level ($9,200).
The bias remains bearish on the higher time frame (1D) as the Wyckoff Distribution continues to play out, looking to retest the lower end of the trade range at $8,120 and establish a potential Sign of Weakness (SOW) somewhere between $8,120 and the $7,700 level.
Looking at the 1D chart, the PA remains in a green candle. It pushed higher to $9,180 before stalling out. The current price of BTC is $9,136 as of this writing and, unless the daily closes out above $9,120 (preventing a reversal), the formation will print a lower high on the 1D.
My expectation the formation will print a lower high over the next few days remains unchanged. The formation still has room to run (up to $9,280) and can still print a lower high, but my feeling is we will visit the lower end of the 1D trade range ($8,120), retest the lower end, and potentially establish a Sign of Weakness (SOW) down towards $7,700 before reversing and moving higher again.
Always remember this is not trading advice.
Outside of that, Happy Trading.