I started this topic Saturday morning, at least in my head. I write most of my analysis at night and I didn't want to work Saturday morning. Can you blame me? Everything on the chart looked fine this morning. I even had the title picked out for my topic "Moon Launch Delayed". Then in the afternoon the rocket blew up on the launch pad. Or so I thought.
Panic spread in the chat rooms, as expected. I have to learn to stay out of there if I want to keep my sanity. :-) There are a few smart people in the chat, but by my estimation around 95% of the people in chat can't interpret what is going on and are looking for a life preserver. When you hand them yours, they argue it is the wrong color. LOL
So tonight I finally got to finish my topic. Things are not quite as bad as they seem. The next few days will tell us which direction BTC is headed. I don't have to tell you that BTC has gone up too far too fast since it passed 8k. What we need for a sustained bull market is a healthy correction. Even if the price falls 50% from the 14k top to 8k or even 7k, we would be in a better position than if we went directly to 20k from 14k. You can't build a strong house without first building the foundation. The stronger the foundation, the stronger the house. What we've been building this summer was a very tall flag pole! Any gust of wind (from AG or Wall Street) and the whole thing will topple over.
Ok, for today's analysis. To summarize, "we got kicked in the shorts". (I bet you won't hear that terminology on CNBC) To find out how long this bear will last, we need to look at the DAILY chart. But before we do that, I want to let you in on a big secret if you promise not to tell anyone. Shhhh! Everything we need to know is already in the charts. Forget about tips in the chat rooms. Forget about learning anything from the news media and forget about the fundamentals. For a trader, all of this information is already built into the price action. The 10 thousand other people who have been following the same crypto (or stock) have already interpreted this information and have cast their vote by buying or selling the crypto (or stock). You can be the best analyst in the world and it won't matter 2 cents if the other 10,000 people analyzing the crypto (or stock) don't agree with you. You need to analyze what OTHER PEOPLE think of the crypto (or stock) and that has already been built into the price. (The only exception to this is if you have inside information and can act on it before it is released to the public. But keep in mind this did not work out well for Martha Stewart.)
Now back to the problem at hand. Something odd has been happening to BTC on the daily chart for the past 5 months (and longer). Since this bull trend started in Feb 2019, BTC has been getting support from the 21 EMA. Most of the time when it hits this EMA it will bounce back up. Only once did it close below the 21 EMA for more than 1 day, but it would close above it for a few days too. So it never ventured far below the 21 EMA. (This is very important and is something you need to remember.) BTC has been doing this for the past 5 months! Today it did the same thing. It looked to me like it was going to close through the 21 EMA when an invisible hand came in to drive the price back up. Was it a miracle, or a whale that knows the power of the 21 EMA?
Don't believe me? Look at what happened last November when the price was coiling around the 21 EMA like a snake. What happened when the price moved away from the 21 EMA slightly to the downside? It fell off of a cliff. We all remember that day.
The direction that BTC will take in the next few days, in my opinion, rests solely on whether the price stays above the DAILY 21 EMA or not. It is as simple as that. No fancy Elliot waves, no trend lines, no misinterpretation of Fib levels or finding the wrong prior support levels. It all depends on the 21 DAILY EMA. At least that's the way it has worked for the past several months. When the price deviates below the 21 EMA, it falls off of a cliff. When it moves above it we have a nice rally.
If the price falls below the daily 21 EMA then I expect a major correction that will make the moon boys cry in their beer. I would be looking at a price in the range of 7.5k and 8.5k. I will even give you a hint as where it might land. The 150 EMA could be the next support level. If you look at previous years you will see the 150 EMA acts as support most of the time when there is a major correction. So this is as likely as any spot for me to put in buy orders. (What you do is up to you).
There you have it. I made it as simple as possible. As weird as it sounds, I believe it all depends on what the BTC price does wrt the DAILY 21 EMA. If the price moves above the 21 EMA, we are going higher. If the price drops below the 21 EMA and stays below it for a few days, we are going into a dive like you would experience in the vomit comet. So be alert and be prepared.
Oh oh. I was 20 seconds from hitting the Publish button and my TV alarm went off. It almost blew me out of my chair. BTC has fallen through the 21 EMA. Not to panic though. It may bounce back up. Hopefully we get a couple of days to watch and see what it does. That invisible hand may move the price back up, or then again it may just give us a finger. LOL
I have to go and see what's happening.
As always... This is not investment advice. Please do you own due diligence when buying or selling cryptos.
@oaksacorn, yes the daily 34 EMA works well too. The price does not bounce off of the 34 EMA as often as the 21 EMA so I can't use it to place buy orders at a low. But when the price falls through the 34 EMA even briefly, BTC is more likely to crash. So it is a better crash indicator. Thanks for the comment.
pablo36
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@oaksacorn, @BDG In my opinion 34EMA and even 21EMA sure are worth a call, the 34EMA in particular seems a very good emergency support, but long term those are bound to fail, because exponential moving averages in a parabolic move are supposed to sustain a parabole, but if we take a look at 2017, it was actually a channel with portions of paraboles, before really turning parabolic, and those same EMA got regularly destroyed. I don't know if it would happen now, but I would not be surprised if we found support below this time.
pablo36
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@pablo36 we have big trendline bottom just under 34EMA though, definitely worth a try
BDG
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BTC has hit resistance at 11k. It has to close above 11.1k on the 4 hour chart otherwise we may revisit 10.5k and possibly 10k. Right now BTC is 10.8k.
BDG
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This morning BTC "rallied" back to 10.5k ($400 higher) but has been stuck there for the past 1.5 hours. It can't decide if it wants to be a bull today, or turn into a bear.
For BTC to continue being bullish it needs to hit 10.7k and stay above it. If it turns into a bear I would be looking at it falling below 10.2k.
As it stands, BTC is waiting at the 10.5k bus stop trying to decide which bus to take. The Bear Bus or the Bull Bus.
Make_Money_Guru_Bitcoin
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Going right as you shared
BlockchainYahoo
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yes short it is
BDG
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Update: Bitcoin has held 10.5k, for now. But something has me very concerned. There has been no real rally back by the bulls. The bulls are all cowering in the barn and they don't want to come out and defend the price. I expect the 10.5k price will fall and we are headed to sub 10k in a few hours. Without the bulls, this sell off will continue.
pablo36
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@BDG, Absolutely no rally for sure. I'm a buyer in the 9-10k range. Passed that, I will turn permabear.