A month ago when the bulls lose the battle to hold the $5800 support, I warned you not to catch the knife as there wasn’t any support at least until $4400 and I was eyeing on the $3800 and $2950 level. Then, when the price was at $4110 I gave out a trade setup with the exact buy-in and take profit level. 50% of the positions hit take profits and the remaining positions hit break-even. Since then I have been waiting for a buy setup as I believe there would be short term relief from the recent selling climax, at crucial support at around $3000. Then a couple of weeks ago I tweeted that I was eyeing on ETC as it has hit significant support at $3.2. The price of ETC is now at $4.73 - a 33% gain. But to be completely honest with you, I didn’t enter the trade as there was a candle that didn't meet my rules of trading. But to those who have followed, congratulations.
Many retail traders were waiting to buy Bitcoin at $3000, but guess what? Bitcoin has once again surprised many in which it only reached $3150 on Bitstamp. This is similar to what happened back in April when many were waiting to buy at $6,000, Bitcoin found its support at $6400 (I did a TA about this several months ago that there was a bullish bat pattern). I still remember at the time people came up with all sort of reasons, for instance, the institutional investors want to stop out the sellers. Even if they are right, can they trade and make profits based on those “assumptions”? I doubt it. As a technical trader, what interest me is WHY the price stopped at a certain support or resistance. You can talk about all the fundamentals if you wish and wait for the market crash to complete, while I am making money based purely on the technical. To be honest, I am not sure if you can trade the Cryptos market based on fundamentals, other than HODL? And how has the result been for you so far? Even for a traditional market I don’t see many retail traders make money by looking at fundamentals. I remember that I was speaking to one of my colleagues three weeks ago who told me that the outlook for the stock market is looking good. It is unlikely Dow will break below 24000. All I said to him was – “From a technical point of view there may be more downside room. But good luck, hope you are right”. At the time of writing this TA, Dow is trading at 23323.
So, why did Bitcoin find support at $3150? From what I can see it’s mainly because of the weekly 200MA. You can see from the above chart the weekly 200MA did confirm it as significant support. Two weeks ago I left a comment on one of MagicPoop’s posts saying that I think weekly 200MA might have more weight than the weekly 200EMA. And why did I think that? If you scan through all the historical data (such as Dow & SPX) you would have noticed weekly 200MA plays a major role in the market (more significant than 200EMA). If the market finds support above weekly 200MA you should focus on buy. But if the market breaks below weekly 200MA, focus on sell or wait until the market breaks above weekly 200MA and buy. Simple?
If you can recall, I have been saying since April that in a bear market like this weekly 200EMA will usually be tested. Now the weekly 200EMA has been broken with one huge bearish candle, retested and confirmed as resistance. Simultaneously, the market has confirmed weekly 200MA as significant support. What does this tell us? It tells us that:
1. If Bitcoin breaks above weekly 200EMA and retest it as support, there would be an opportunity to buy (for short term trade only). Targets would be $5240 (structure + 0.618) & $5800 (major support turned into major resistance)
2. Conversely, if Bitcoin breaks below weekly 200MA and retest it as resistance then it may be a good time to sell. Bear in mind tho, the take profits level for a short position is not that easy to identify so I wouldn't recommend you to do it unless you are a professional trader.
And, unless you are scalping, do not trade between weekly 200EMA & 200MA ($3150 - $4170).
I hope this TA has provided you with a broader perspective as to how to position yourself in the Cryptos market or, how to swing trades based on the support/resistance I have given you. Now, I have to close my computer and spend time with my wife. If you have found this post helpful and would like me to continue giving you more updates, press that LIKE button and leave comments below. And remember to bookmark this post so you can receive timely updates.
Taiwan Bear
**This post is for educational purpose only**
Many retail traders were waiting to buy Bitcoin at $3000, but guess what? Bitcoin has once again surprised many in which it only reached $3150 on Bitstamp. This is similar to what happened back in April when many were waiting to buy at $6,000, Bitcoin found its support at $6400 (I did a TA about this several months ago that there was a bullish bat pattern). I still remember at the time people came up with all sort of reasons, for instance, the institutional investors want to stop out the sellers. Even if they are right, can they trade and make profits based on those “assumptions”? I doubt it. As a technical trader, what interest me is WHY the price stopped at a certain support or resistance. You can talk about all the fundamentals if you wish and wait for the market crash to complete, while I am making money based purely on the technical. To be honest, I am not sure if you can trade the Cryptos market based on fundamentals, other than HODL? And how has the result been for you so far? Even for a traditional market I don’t see many retail traders make money by looking at fundamentals. I remember that I was speaking to one of my colleagues three weeks ago who told me that the outlook for the stock market is looking good. It is unlikely Dow will break below 24000. All I said to him was – “From a technical point of view there may be more downside room. But good luck, hope you are right”. At the time of writing this TA, Dow is trading at 23323.
So, why did Bitcoin find support at $3150? From what I can see it’s mainly because of the weekly 200MA. You can see from the above chart the weekly 200MA did confirm it as significant support. Two weeks ago I left a comment on one of MagicPoop’s posts saying that I think weekly 200MA might have more weight than the weekly 200EMA. And why did I think that? If you scan through all the historical data (such as Dow & SPX) you would have noticed weekly 200MA plays a major role in the market (more significant than 200EMA). If the market finds support above weekly 200MA you should focus on buy. But if the market breaks below weekly 200MA, focus on sell or wait until the market breaks above weekly 200MA and buy. Simple?
If you can recall, I have been saying since April that in a bear market like this weekly 200EMA will usually be tested. Now the weekly 200EMA has been broken with one huge bearish candle, retested and confirmed as resistance. Simultaneously, the market has confirmed weekly 200MA as significant support. What does this tell us? It tells us that:
1. If Bitcoin breaks above weekly 200EMA and retest it as support, there would be an opportunity to buy (for short term trade only). Targets would be $5240 (structure + 0.618) & $5800 (major support turned into major resistance)
2. Conversely, if Bitcoin breaks below weekly 200MA and retest it as resistance then it may be a good time to sell. Bear in mind tho, the take profits level for a short position is not that easy to identify so I wouldn't recommend you to do it unless you are a professional trader.
And, unless you are scalping, do not trade between weekly 200EMA & 200MA ($3150 - $4170).
I hope this TA has provided you with a broader perspective as to how to position yourself in the Cryptos market or, how to swing trades based on the support/resistance I have given you. Now, I have to close my computer and spend time with my wife. If you have found this post helpful and would like me to continue giving you more updates, press that LIKE button and leave comments below. And remember to bookmark this post so you can receive timely updates.
Taiwan Bear
**This post is for educational purpose only**