Another week in solitary and Bitcoin once again goes into a major tail-spin. Just like the last ban. Not a bad contrarian
indicator. We left this 7 days ago with a 'minimum upside target at 17224' created by the reverse
formation. Hopefully you got to close out any swing longs as the target was eventually achieved with a first high at 17200
and then a second rally peak at 17233 - 6 long days ago now, and just beating the minimum upside target by 9 points. So
far so good, hopefully, if you managed to stay long for the ride. Some ride. It's been downhill ever since - we were
actually long again last night on the break out of the flag from around 14500 and although it hit the first resistance/rally high
from peak to left for a 460 or win for day traders, others who left stops at 'just under 14500' will have escaped roughly
evens - not good but could have been much worse.
So now, after 6 days of losses which has taken Bitcoin down 25% from 17233 back to a low at 12800 this morning at 23:30
EST it's still not clear that Bitcoin has made a major low yet - but what that steep decline has done is create a selling
climax, washing very weak bull clean away in the process. It's highly likely that it will start to reclaim the ground it lost last
night, grinding towards the very start of the decline and if the patterns allow will be looking to trade parts of this.
But the path is uncertain again now - it was looking good last night for a restest of the highs - it had finally left the
controlling upper dynamic (for once not a perfect set of parallels) and was beginning to pick up buyers again...until
the news out of S Korea - just the kind of news to make Korean retail investors' hearts turn cold and cause a panic. As
it was intended to do. Although we've definitely seen a selling climax and a new set of bulls replace stale ones towards the
lows - meaning more upside likley in near term, we can still fall away hard like last night on adverse news events. And this
low just doesn't feel like it's finished it's bottoming process yet...in the circumstances all we can do is look for trade set-
ups in the meantime and try to stick with what the chart tells us to do next ..
Right now Bitcoin is making a littel and can be bought on exit of the upper parallel...near term chart to follow
Bitcoin is back on support from the previous highs at 13904-13875 - it might be the bottom, but how do we know? We don't. Some like to bottom fish and when they get a bite it can be a good one. But bottom fishing also means having your stop/bait swiped as the current coin of your dreams sinks lower still - especially on the second dip lower of a flag formation - but still we do it, ever hopeful, often because we see others do it and we seek the perfect trade too...to prove ourselves true masters of the game...just one perfect strike, the home run, the ultimate 40 yard free kick, with a wicked 9 foot bend on it too. Well it can be done, for sure but always the trouble with buying the first strike on perceived support is what happens if we get a flag formation and that second strike about to come is going to be lower still....so if buying dips you must be aware of this potentiality, especailly with Bitcoin which makes so many flags both large and small during the course of any 48 hour period and place the stop quite a way below the entry point - or you can take less risk and stop trying for perfection. You don't need to be a perfectionist. You don't need to hit bottoms bang-on. We're not trying to become Obi-wan Kenobi here. We honestly don't need to be. All we need to do is identify patterns (in up and down markets) and recognise that these patterns have a perfect inverse relationship and shape in a down-wave compared to an up-wave...and notice that when the breaks occur, both up and down, you don't need to be a perfectionist to trade them - you just need to be there for the next 1 to 2 hours - to get in and get out again. And in truth you don't need any guide to show you the way. All you need to do is look at the trail Bitcoin leaves on your screen, if possible once every half hour or so because it moves so quickly and changes shape so many times during any 24 hour period - is the patternit's making changing..can you see a flag or continuation pattern evolving...especially after a fast move up like we've just seen (or down in a down-wave)...that is the natural place to look for such behaviour...1-2 burst up then continuation, usually for longer than the burst up unless a flag, which is quicker/faster happening in nature. You know all this already anyway, most of you.
Which finally brings us back to the now...Bitcoin could well be making another flag right now...if so can be bought on exit of the upper paralle with stops under by 100 or so. If so, we need to see push up through the high of the day - with enough buying power and momentum - to know that tghe break higher is good...sometimes with two flags on top of each other after a good spurt higher as we've seen, it can struggle to beat that previous high to immediate left...at 14215 to know the break is good...if it stumbles there look to close out for 200 or so profit - in the end we want to average 200 points per day or 10% of Bitcoin at current values per week. So it takes 10 weeks to buy outright at current values. Roughly.
Limit down for this flag...any failure here and it's plain to see what will happen next...
Meanwhile, in classical fashion, Bitcoin has tried to rally and been rejected under the bigger parallel underpinning the secondary rally that it recently fell below and is likely to fall away to 13605-13656 and then stage a bounce of around 150 points maybe 200 - but then could well fail again, ideally coming back to 13417 where the fixed blue line and the largest, lowest parallel that contains downside of this entire counter-rally so far waits - that would be a good entry point if we see it later, with stops below by 50 to 100 points or so. And if we don't get this chance later will just have to keep eyes peeled for the next pattern we recognise emerging...
But until it can clamber back above that parallel above it and then beat 13605 Bitcoin is still vulnerable to another sell off which has the potential to retest the lows...if we see this unfold and the lows at 12800 on Bitstamp hold up we have the first clue it's bottoming..and if it does fall away from here and retest the lows we want to see it hold up and bounce - not slice straight through on 1 minute chart (newbies beware) as it did earlier on...
*There is an update to last comment from an hour ago posted in Add Comment section below this (out of practice and added to wrong box, der)
We are watching out for a potential double bottom here as we move into the far East session...look for support arriving at 12794 on Coinbase chart and 12900-12800 range on Bitstamp...can look to buy dips with stops below 12800 by 100 or so points. This is speccy and has all the risks associated with bottom fishing...and also all the rewards if right. Down to investor profile and attitude to risk.
And On downside, if 12800 fails it's back to the short side with stops above 12968 for now