Hi friends! I hope you are all doing well. Let's take a look at Bitcoin! Looking at the four hour BTC chart, you'll probably notice things look slightly different. Unfortunately, I had to restart my computer, and I lost my all of my charts in the process, so I had to redo them. They're all pretty much the same, so the old analyses should still be comparable to the new charts.
Here on BTC, we can see that we had a break below the "heavy resistance" level (at the 50% retrace) then BTC formed a series of bear flags, inside of a symmetrical triangle, and then miraculously broke to the upside of the triangle. We can see now, that BTC has turned lower and is testing the 50 EMA (in orange) for support, after breaking above it on the symmetrical triangle breakout. Whether or not the 50 holds as support, will be a critical indicator to watch going forward. I've drawn a pink downtrend channel on the BTC chart, to show you that we are still in a bear market correction. Make no mistake, until we break the top side of this pink downtrend channel, the bears will remain in control.
If you'll notice, there is a dotted center line, in the middle of the channel. I noticed that there seems to be a pattern, in the way that BTC has acted, after the center line of the channel is surpassed. At the beginning (left side) of the channel, you can see that when BTC broke above the center line, it hit the top of the channel. After that, it broke below the center line, then rallied back above it later, but failed to stay above. A little later, we can see that it rallied back above, and then reached the top of the channel again. Then, BTC fell back below the center line, and then failed to stay above it again. Now, we have just broken back above. So, is the pattern Top, fail, top, fail, top? It could be. As a professional trader, I look for obscure patterns and technical nuances that give me an edge on the market. This is a good example of a pattern that COULD repeat itself. To know for sure, we need to see how BTC behaves here at the 50 EMA. Remember, baby steps people. If BTC fails to hold the 50 EMA, and especially if it drops back below the center line of the channel, then obviously, the pattern is not repetitive. However, if we see a hold at the 50, and BTC turns back to the upside, after establishing the 50 EMA as new support, then it would certainly increase the probability that the pattern will come to fruition.
Looking at the MACD, we can see that there has been a small bullish divergence, as momentum made higher highs, while price made lower lows. It is a small addition to a slight, tiny little hint of bullishness. Don't, don't, DON'T FORGET, that we are in a huge downtrend channel. Until BTC gets above it, it will remain in a technical bear market correction. If the center line is broken, the repetitive pattern would be nullified. Each low made in the triangle could then act as support, with a larger support level at the 78.6% retrace, and then the bear flag target and the bottom of the channel. If we hold the 50 EMA, the 200 EMA (in purple,) the heavy resistance, and then the top of the channel, will be in play.
This has been your not-so-humble market wizard, droppin' knowledge like bombs in this place! Please follow, comment, like, and share on social media. Good luck trading everyone!
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
Hi @MagicPoopCannon could you please provide us your opinion on the market risks of tether/bitfinex relationship and the artificial pump of BTC price. Do you put any weight on this? I'm only asking if there is a strategy you employ with news that could potentially have huge ramification in the markets plus technical analysis. What do you suggest we do with such news that has been circulating now for several months.
powderpc
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@BitcoinBobby, dude, this guy/gal has no interest in guiding you with fundamentals. If you follow Tom Lee ( @fundstrat ) on Twitter you will find a reputable authority and he shares my view that it's somewhat irrelevant what happens to Tether. Even if Tether gets shut down it will be a simple matter to move to some other asset-backed equivalent. And it would be pure suicide for any exchange not to honor the value of USDTs. Why in the world would an exchange essentially kill a multi-billion dollar valuation business by refusing to back the currency they use? Tether could definitely use more transparency and Bitfinex and others definitely come across as shady when they refuse to disclose exactly what they are doing in terms of liquidity management.
Here's the thing. Modern financial systems with fractional reserves essentially have nothing in the bank and rely entirely on central banks to balance out their need for cash on demand. Tether was audited to have $442 M previously in Sept (? not sure this is right) so we know they have a lot of cash and not just nothing. The question is whether or not they have EXACTLY what they are supposed to have and whether or not they've manipulated crypto prices by using their own Tethers in the open market. Given that only $2 B in USDT supposedly exists this amount is unlikely to have much of an impact on a ~$400 B market. What I don't really understand is how transparent Tether volume is overall, and this could be the crux here as Bitfinex could in theory have done a kind of "quantitative easing" where they bought a bunch of crypto to drive prices up and then sold back to USDT to make a profit. But in this scenario they can't exit their USDT and would need to buy back into crypto at a lower price in order to gain more crypto. Given that they just injected a bunch of liquidity into the market they can't exactly reverse the price action by printing more USDT. So the logic here doesn't seem to favor the belief that they benefited by printing a bunch of USDT because 1) they would have to sell them to other exchanges for real dollars and an exchange buying Tethers will want a solid counterparty to feel confident holding those Tethers. 2) Injecting more liquidity into the market doesn't really benefit them in a short-term trade as they can't reverse the price action by adding more Tethers to buy back crypto at lower prices.
The reality is that if 1) they have zero dollars to back their Tethers and there is a 100% run on Tethers (i.e. everyone wants out of Tethers) then it still won't make much of a difference. Bitfinex and whatever other entities backing Tether are rolling in cash and crypto holdings and have equity valuations in multiples of billions USD equivalent. It's highly unlikely they don't have at the very least an equivalent amount of assets to make Tether whole should the entire thing collapse. If they didn't back it up then they would self-destruct their business which would be pointless.
The second part is that if there is a "run" on Tether people aren't going to fiat. They are likely having to buy crypto and then sell to fiat through a local or OTC exchange or moving it to another exchange. If this happens a short term spike in crypto prices will likely create enough momentum that there won't be much of an effect if any on crypto prices overall as you can't exactly unload from Tethers to say Bitcoin and then back to USD in a quick manner. It will be illiquid and highly unlikely to influence crypto prices unless the news triggers adverse market behavior. And with crypto traders being fairly twitchy you never really know how this will play out but given all of the huge bounce backs from Parity hack, Coincheck hack, Nicehash hack, etc. it seems unlikely that some bad news for Tether plays out as anything more than a buying opportunity.
UnknownUnicorn1615160
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@powderpc, hey man sorry for delay. You know it's been an interesting past few days. Much appreciated you putting some much needed perspective on Tether. It's amazing how much false news or over-hype an article can get. I'll follow Tom Lee as well. I know he's a reputable analyst with some bullish predictions. I believe he is the one that said BTC is a steal at 9k, but I don't think he even predicted a 6k potential bottom this year. Current price action is looking more bullish on the short term charts (RSI, MACD, STOCH), but MACD on the daily is still in bear territory. I would like to see BTC break out of the ascending channel and hold it for a period of time before I go long again. Also what I found interesting is when I did a multi-year look at RSI and I looked for how many times it got to the recent lows I only show 3 times since 2016 on the daily. And after each low it was followed by a bullish trend up up up and away. Let's see where this current run goes.
Tradetech
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Excellent analysis!
In the past few days I've been closely watching the price action of BTC, and I found your analysys and the ones of ronfkingswanson equally good in my opinion. One detail... while he was bullish you shere bearish!
Somehow now the 2 market views are converging (from completely different logics and market narrative), this gives me a strong hint that the most probably course of action will be as follows:
- price will keep going down a little, then bounce back somewhere in between 10900/10700 (or 10800 +-1% if you want). The price correlation between ETH and BTC give me the idea that price won't crush further down, at least for now
- the price will grow fast until reaching either the 50 EMA or the 0,5 Fibonacci (12550/12750).
- after a brief bounce back it will "probably touch the pink upper line (13700-13800)
- after that... I forecast a gloom future for cryptos... IF the price won't make it to cross the upper resistance at 13700/13800, it will probably be the last "high" before the final crush to the 7000/8000 range, that will persist for a while (months if not years). BTC parabolic phase, in this case, will be definitely over. Winter will be Coming.
kardia
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@Tradetech, It's likely the price has dropped because of the Tether controversy. People are being shaken out of the market by a rumor that we don't know the full story of. Until this thing blows over, the price will probably continue to decline. And this will leave a very bad taste in the mouths of a lot of people who invested in Bitcoin, hurting the entire market. In other words, this is bad!
Tradetech
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@rev214us, it might explain a small dip, but if the news doesn't get any worse than this, I do not think it has the power to massively move the market.
Le'ts check out what's happen once it touches the 10900/10800 support (which correspond to the supercharged Ethereum touching the 1140 weekly pivot)
kardia
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@Tradetech, probably not, but all the FUD that has been coming out about Bitcoin over the past few months has done a lot of damage. It's depressing looking at what's happening; it's like Bitcoin is dying a slow death. I don't think we will see a $20,000 bitcoin again. I hope I am wrong. Too many idiots spreading fake news about Bitcoin.
hottogo
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@Tradetech, I have had the exact same thoughts! Been following those two chartists as well and come to the conclusion that we will push up over 13K before a big correction to 8k
Wolverinos
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Hey Poop, what do you think about the pattern I just found ?