MagicPoopCannon

Bulls Get A Relief Rally in Bitcoin! I Don't Trust it. (BTC)

BITFINEX:BTCUSD   Bitcoin / U.S. Dollar
Hi friends! Welcome to this update analysis on Bitcoin! Let's get right to it! Looking at the four hour chart, you can see that BTC             had a sharp rally today, just as the third fractal had ended. In my eyes, that was the most fascinating thing about today's action. If you remember from my previous posts, I've been warning about how fractal patterns can end unexpectedly. Today's rally was definitely a result that I did not fully expect, but I did note that things were changing in the third fractal . Let's reflect on those changes, so that we can understand the mechanics of what happened in the market, that led to this technical surge. Obviously, there was a short squeeze, but beyond that, there was one thing in particular to note. If you recall from my last post, I said "things are changing a bit here. In the current bear flag , you can see that it's getting long in the tooth, and subtle changes have emerged that are different from what we've seen in the recent past. In particular, this bear flag has managed to not break down when the 20 EMA (in blue) passed through it's body. That means it's the first bear flag , out of the past 8, that didn't break down from a intersection with the 20 EMA . So, that is definitely noteworthy. Additionally, you can see that price action has poked above the top of the newly formed downtrend channel (in dashes) and it's currently flirting with the 50 EMA (in orange.) Regardless, the pattern that I've been following still stands strong. These developments are not ideal, but the pattern still remains. If we see a breakout to the upside from this bear flag , that would change the progression of the fractal . However, as I've just shown with the prior examples, fractals can change slightly, and then follow the same general path. However, if this bear flag fails, I would consider the pattern dead. After all, we are at the end of fractal #3. Fractal #4 is not guaranteed."

So, fractal #3 ended abruptly, and we can see the technical developments that lead to the rally. As a result, BTC             is becoming increasingly bullish . You can see that it has actually broken out above the top of the downtrend channel (in black,) in what appears to be a bull flag . However, I'm just sitting on the sidelines right now. There is nothing wrong with being in the safety of cash, especially when the market is at a critical juncture. Multiple things just went wrong. The head and shoulders pattern did not break down, and there was a breakout above the downtrend channel . So, from here, I'm just going to wait for more data, so that I can formulate an opinion. I am neutral at the moment, simply because we are above the downtrend channel . However, if we reverse, and close back inside of the downtrend, I will short the ever loving shizzle out of BTC             with the quickness! On the upside, I need to see some sustained trading above the downtrend, in order to gain confidence. With that said, today's rally was a win for the bulls, but it hasn't done much to impact this crippling bear market. The trend is your friend, until it is not. Right now, the downtrend has been violated, and I'm assessing the viability of this breakout. In all honesty, the current candle appears to be holding support off of the top of the channel, after the last candle closed above it. Regardless, I simply don't trust it yet, and neither should you. I need to see more evidence, before I turn bullish . I'm the master of the charts, the professor, the legend, the king, and I go by the name of Magic! Au revoir.

***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***

-Magic loves you-

-JD-
Comment: Bitcoin is just starting to break down from a pattern that I have dubbed a "false flag." The downside target will be a retest of the top of the downtrend channel.

Comment: The update is here!