BTCUSD: Poised For Retrace. Back To 7Ks? Or New Low?

BITFINEX:BTCUSD   Bitcoin / U.S. Dollar
BTCUSD update: 8427 resistance decisively broken, so where is the steep rally? A retest of supports is necessary to "prove" that the bears are no longer in control.

At the moment, a shooting star candle formation is unfolding just after pushing the 8427 level that I have been writing about. And if this candle closes in this configuration, it is a bearish sign. Keep in mind this period has at least 10 more hours before the candle is official. The close will more than likely determine if this market is going to retest a lower level, or continue the initial rally leg that has been building since the Senate hearings on Tuesday.

One of the basic tenets of technical analysis is that markets trend. Trends occur on every time frame and carry different weights. A 1 minute trend is much less significant than a 4 Hour trend, etc. Over the previous month, the intermediate trend has been bearish , while the bigger picture is still bullish . This can be confusing and is why it is so important to know what time frame you are looking to operate on before taking any trade.

In order for this intermediate bearish trend to break, the market needs to fail to make a new low and instead, take out a previous peak. This is a process, not a single event. 8171 to 4983 is a major support area (.618 of entire bullish structure) but does not guarantee a reversal will materialize.

One scenario that will signal the return of strength before it is obvious is what I call the broader higher low formation. "Broader" means it must happen on a large time frame like a daily or 12 hour. A convenient support area for this higher low is the 7149 to 6677 minor support zone (.618 are of current bullish swing).

If price retraces from the current pin bar , I will be watching this minor support zone for bullish reversal patterns. Since the 8427 resistance was compromised, I am anticipating that there is a greater chance the minor support holds. A bullish reversal off of this zone should then lead to a higher high if the market is changing direction.

Keep in mind, a broader higher low does not necessarily lead to a new bullish trend . This market may become more range bound before the bigger picture reasserts itself. The focus is to observe the signs and anticipate the most immediate move relative to your time frame and adjust accordingly, not to "predict" the broader moves of the market and feel good about being "right".

In summary, this market is not out of the clear yet. IF the minor support in the high 6Ks is broken, this market may retest lows. IF the support holds, then anticipate the next resistance to be compromised and adjust accordingly. I am playing the bigger picture and in a situation like this, my choices are to add to my position, decrease my position, or do nothing. Since I am sticking to my bigger picture plan, I will not be shaken by a new low, I will just hold on to what I have and wait until the market shows a more supportive environment. This is not that difficult to do because my position is not margin based. I compare it to holding physical gold as opposed to paper gold ( futures ). IF the higher low forms, I will be looking to add once more, and from there only add on resistance break outs. My decisions are a function of the time frame that I am operating on, and is key to avoiding confusion and sticking with the plan.

Questions and comments welcome.
Marc Principato, CMT |Learn more about techniques that I use: | Cofounder |


So far we retraced to 61.8% and price bounced. It is possible the price to fluctuate and try reach 78.6 before it continues to fall. As we have a very solid prevailing downtrend visible on higher time-frame charts. @MarcPMarkets will help us define better the long term changes.

In day trade period (next 6-12 hours) we could play our longs until we test 78.6%. Then look how market will react and possible open short with target 61.8% or lower (50%).
stell_s1 stell_s1
@stell_s1, We just reached 78.6% in just 4.5 hours. This was quite fast. Let see if we go further...
Goverment spending in the USA is going completely out of control. Eventually Bitcoin wil rally as it is viewed more like a safe haven. I'm waiting for the rally.
Im convinced the cryptomarket is goin to rich 2-3 trillion at the top. so it doesnt matter if it goes down a little bit. It has to be 7-8 k bottom and a fall from 9.5 10.5 k
I like your posts Marc wise approach. TY
Marc would you please point out the bullish reversal pattern when it is realized. I understand these can materialize more than once and a false call my lead to criticism but I think it will help many here to understand the candlestick formations we are looking at. I think everyone on here knows the head and shoulders formation (I cant hear it one more time) but these less known formations are a benefit to all. Thank you in advance, and I'm right there with you on this call. Please excuse my addition of my simplistic chart but its what Im working from

crimsonronin mycoinmoon
@mycoinmoon, I'm seeing wedge to pennant fractals:
+6 Reply
Very helpful as usual!
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