Back to the BTC Decision Level

BITSTAMP:BTCUSD   Bitcoin / U.S. Dollar
BTC 50-56k, are we here again already? Everyone is asking the question, which way this time? Will this hurt as much as it did the last three times? Will we have a double peak like BTC had in 2013? Currently I'm leaning 70%/30% long.

The purpose of smart money is to accumulate dumb money, and distribute it to themselves, so we should always do our analysis with this fact in mind. Dumb money operates based on emotion and inexperience, smart money manipulates this process to guarantee their place at the top. If you look back at the last three times we were at the 50k BTC level, we had a nasty fall and anyone who was long got burnt. Dumb money will not soon forget these past experiences, which is why the smart move for smart money is to instead go long this time around. The question in my mind while looking at the charts today was, "will the price action at this level today be a reflection of market sentiment or a smart money manipulation?" I'm 70% that this level will reflect price reality this time around, which means a break to the up side. 30% chance it will drop from this level. My reasoning is as follows:

1. If you look left on the chart, the Labor Day drop in September was an obvious manipulation by smart money. The week long "education" we all got that El Salvador was adopting BTC nationally while prices rose on low volume over the weekend was such an obvious setup for a drop on market open Tuesday anyone with experience could see it. There is always doubt in any situation, but as you can see from my last post, I spent most of the time analyzing why I though it would drop in price.

2. The level we are at over this weekend is prime real-estate for stop hunting by market makers. We are just above the Labor day short entries which is where 10k-20k FUD's would have places their stops. This is also a signal that this level is a fake break of resistance, common stop hunting, but I think the smart money manipulation was on Labor day. A Labor day fake-out drop to stop out any Moon boys. **** Stop hunting could also mean just that, this current level is nothing else but hunting stops and could continue downward.***

3. If you were paying attention, the Wyckoff pattern that showed up from March to May at the 64k highs repeated again during August - September, but this time around after the initial Labor day drop, reversed itself to our current level of 53k-56k. This setup was again too obvious as everyone spent the the months following the drop back in May learning all about the Wyckoff methods and absorbing all the social media postings pounding it into our heads. To easy to see that reversal coming. Would smart money simply let the herd win on the 2nd reveal of the chart pattern? Doubtful.

4. The ferocity of the upward move from $42k has happened in just 10 days. When smart money makes a move, it moves quickly, locking many out of the market. Why would I pay 52k for something that just last week could be had for 42k?

5. On the 1-hour chart, you can see the price testing 55k rapidly, which on low volume usually means it will break the opposite direction, in this case down. However, if you look at the 4-hour chart you get a different picture. The move up a couple days ago did hit a high volume of sellers at 55k but the next two bars closed up in the green on medium volume . This usually indicates a lot of momentum to the up side. If the two bars following that long green bar up were red, it would indicate strong selling. The tests of 55k over the past two days on the1-hour seem to be happening rapidly with little retrace. This usually indicates that price will resolve at this level and continue up in the same pattern that happened at 48k a few days ago.

6. I have yet to see the media call a climax of buyers into the market. Normally at market peaks when smart money is selling, the news will be universally good drawing sheep into the market to offload their money into the pockets of smart money. Every channel will be universally saying, "Bitcoin! Its a new paradigm!" Instead from March to May we heard nothing but, "China is banning BTC , the US government is going to crack down on Crypto! Run for the hills!" This is not the kinda of news that marks a market top. How is smart money supposed to offload their Crypto to you when every news outlet is saying the end is near? That is the kinda of news that sounds like big institutions trying to mark price down so they don't miss out on the big run up.

7. The 10 year log chart still looks like we have more to go before this halving rally is over. When in doubt, go long. You'll probably make your money back eventually.

8. CoinBase stock still looks like its in an accumulation phase and could break upward for another test of $280 resistance.

Thoughts on a possible drop:

1. As previously stated, this is a perfect level for stop hunting, so maybe they are just hunting stops over the weekend before continuing down.

2. The 1-hour chart says to me 56k will be tested again Sunday or Monday on low volume and then drop. However, never make a trade on one chart resolution, with one indicator.

3. The monthly chart does look like a bear market, but this last 10-day run-up looks like a break out of the downward trend to me, or at least a sideways trend on the log chart below the 50% mark.

Short Conclusion:

1. If the price breaks up above 56k I would expect the 1-hour and 4-hour chart to continue a low volume test of 56k again with continuing higher lows, and then quickly smash through that level on high or medium volume before Monday open. I would expect the price to quickly close the gap from 56k to 64k this week. (70%)

2. If its going to go short from here, I would expect at low volume test of 56k again (looks like it already did this) and the price starts to drift down slowly below 53k on low volume Sunday. Then when traders are back on Monday morning the drop to happen fast and furious like September 6th . (30%)

This post is for educational purpose only.
Comment: The flash crash that just happened 45 min ago on the 1 min changes a lot. I'm leaning more 85% the move tonight /tomorrow will be a break to the upside. Although I will say the price action is making me think short, the significant volume at 51k suggests smart money is willing to support the current price. That crash also serves the purpose of hunting stops of anyone who is long right now before they push prices up. Still too early to tell, but we are all going to find out soon enough.
Comment: Prices action broke the neckline a few hours ago at 56k and have surpassed the high for this recent price area, but since then are just hovering between 56k and 57k which is a bit concerning. This could be another fake-out with a drop coming at London or NY open. Only time will tell, but I would have expected a rocket ship of higher prices by now, which has not materialized.

Things still look good on the 1 and 4 hour, but the smaller time-frames are a bit concerning.