Hello everyone, thanks for taking the time to read this analysis and if at any point you find it useful please show some support and give it a thumbs up!
The chart is pretty self-explanatory, however I’ll go through a couple things.
While we do have some bullish signals emerging on higher time frames (divergences, RSI exhaustion, strong support level around 5.8k), I do not believe we will see a big rally this time and instead this small bullish relief over the past week or so is already coming to an end. My last idea discussed a move up towards 6,800 before resuming its fall however, Bitcoin is having a lot of trouble even breaking up past 6,600.
Here are my reasons for a drop and rationale for a target towards the 4.2k-4.5k range:
1.) On the daily view Bitcoin is following an ABCDE pattern inside this descending channel. This pattern was validated once price was unable to break the top of the channel around the 8,400 range.
2.) There is a head&shoulders pattern on the daily view. Yes this pattern can be a continuation pattern and not always just a reversal pattern. If Bitcoin fails to break 6,800 then this pattern is still valid.
3.) Death cross is just about to occur with the 200MA (orange) and 400MA (light blue). While typically we use 50 and 200 for the death cross, higher moving averages only confirms an even longer lasting bearish continuation.
4.) Bitcoin has fallen back below the 0.618 Fib retrace and is bound to reach the 0.786. This Fibonacci retracement has been drawn from 19.8k (All time high) down to $0.00.
5.) There have been hidden bearish divergences on daily RSI following every peak from 11.7k down to the recent peak which indicates further downside.
My first target for price to reach is around the 4.2k to 4.5k range. This price range falls in line with the 0.786 fib level, the 800MA (purple) and we even have the log support line from 2011 onwards (in black) just below which could end up intersecting nicely with these levels. On top of that, when we look at the volume profile we can see this range has the highest trading volume (excluding 2,600 and lower prices).
This entire move over the last week or 2 has been strikingly similar to the move we saw back at the end of May into the beginning of June. The bar pattern you see I have pasted on my chart is copied from this date onwards and overlaid onto current date.
From a fundamental standpoint we have 2 major events occurring in September:
The first event is an announcement from the SEC on their decision to offer Bitcoin ETFs. This was supposed to be announced August but has been delayed until September. There is some talk from financial experts that they will most likely be denied again like they were earlier in 2018. Another thing I wanted to note, is while Bitcoin ETFs are being offered, ETF Shorts or Bitcoin Bear funds are also being offered. So even if it does get approved, why do people assume this automatically means bullish price action will follow? It is very possible this will just allow investors to short bitcoin more easily than before.
The second event is the Mt. Gox bankruptcy court proceeding in September. Remember when we heard about thousands of bitcoin being sold off on the spot market from the Mt. Gox trustees? Do you also remember when they said they will stop selling on the exchanges until September 2018? I think a lot of us have forgotten about this. There are about 137,000 Bitcoin remaining in the trustee’s cold wallet and if they decide to start selling again in September after their next court hearing, it will surely drive the price down.
Now despite all of this, I want to make sure we are well aware of the large support holding Bitcoin up right now. This is the 89 EMA on the weekly.
We have not seen Bitcoin break below this yet, except for a few wicks below. This is something I’ll be keeping a close eye on. If this breaks, it should help confirm my hypothesis of a drop down to the 4.2-4.5k range. If it continues to hold however, we need to re-assess the idea that we could in fact see another relief rally over the next couple of weeks.
Please remember to show some support if you found this idea useful! Thanks :)
The chart is pretty self-explanatory, however I’ll go through a couple things.
While we do have some bullish signals emerging on higher time frames (divergences, RSI exhaustion, strong support level around 5.8k), I do not believe we will see a big rally this time and instead this small bullish relief over the past week or so is already coming to an end. My last idea discussed a move up towards 6,800 before resuming its fall however, Bitcoin is having a lot of trouble even breaking up past 6,600.
Here are my reasons for a drop and rationale for a target towards the 4.2k-4.5k range:
1.) On the daily view Bitcoin is following an ABCDE pattern inside this descending channel. This pattern was validated once price was unable to break the top of the channel around the 8,400 range.
2.) There is a head&shoulders pattern on the daily view. Yes this pattern can be a continuation pattern and not always just a reversal pattern. If Bitcoin fails to break 6,800 then this pattern is still valid.
3.) Death cross is just about to occur with the 200MA (orange) and 400MA (light blue). While typically we use 50 and 200 for the death cross, higher moving averages only confirms an even longer lasting bearish continuation.
4.) Bitcoin has fallen back below the 0.618 Fib retrace and is bound to reach the 0.786. This Fibonacci retracement has been drawn from 19.8k (All time high) down to $0.00.
5.) There have been hidden bearish divergences on daily RSI following every peak from 11.7k down to the recent peak which indicates further downside.
My first target for price to reach is around the 4.2k to 4.5k range. This price range falls in line with the 0.786 fib level, the 800MA (purple) and we even have the log support line from 2011 onwards (in black) just below which could end up intersecting nicely with these levels. On top of that, when we look at the volume profile we can see this range has the highest trading volume (excluding 2,600 and lower prices).
This entire move over the last week or 2 has been strikingly similar to the move we saw back at the end of May into the beginning of June. The bar pattern you see I have pasted on my chart is copied from this date onwards and overlaid onto current date.
From a fundamental standpoint we have 2 major events occurring in September:
The first event is an announcement from the SEC on their decision to offer Bitcoin ETFs. This was supposed to be announced August but has been delayed until September. There is some talk from financial experts that they will most likely be denied again like they were earlier in 2018. Another thing I wanted to note, is while Bitcoin ETFs are being offered, ETF Shorts or Bitcoin Bear funds are also being offered. So even if it does get approved, why do people assume this automatically means bullish price action will follow? It is very possible this will just allow investors to short bitcoin more easily than before.
The second event is the Mt. Gox bankruptcy court proceeding in September. Remember when we heard about thousands of bitcoin being sold off on the spot market from the Mt. Gox trustees? Do you also remember when they said they will stop selling on the exchanges until September 2018? I think a lot of us have forgotten about this. There are about 137,000 Bitcoin remaining in the trustee’s cold wallet and if they decide to start selling again in September after their next court hearing, it will surely drive the price down.
Now despite all of this, I want to make sure we are well aware of the large support holding Bitcoin up right now. This is the 89 EMA on the weekly.
Please remember to show some support if you found this idea useful! Thanks :)
Comment:
Here's a zoomed in look at the fractal from end of May/Early June. Notice the 89EMA (green) on the 4hr is acting as strong resistance, and the 50MA (blue) acting as support. Price was dealing with these moving averages the same way back in the end of May, it will be interesting to see if it continues to follow it!
Comment:
So last night we got a quick pump on Bitfinex at the exact time Bitmex shut down for scheduled maintenance (9pm EST). This was not a short squeeze, however shorts have come down quite a bit as a result of this pump. The last time shorts were this high, we saw a much larger spike in price. Either way this was a great opportunity for bulls to make their move and they did it at the perfect time. Unfortunately for many Bitmex users, a DDoS attack followed after maintenance and prevented people from logging in to cancel their short orders and many accounts were liquidated as a result.
So now the issue now for the bears is whether or not this little pump last night is going to cause more buyers to step in and take advantage of what appears to be the start of a new rally. Or maybe all these shorts coming down is a good sign for the bears and we won’t see the real short squeeze for a little bit longer.
With that said, the bearish signals I discussed above are all still in play. The right shoulder is becoming a bit more complete as long as price stays under 6,800 and the H&S is still in play on the daily view. The 200/400MA haven’t crossed yet so this is something to keep an eye on. Don’t forget that tomorrow we will get a decision from the SEC on the Proshares ETF which should have a significant effect on price once an announcement is made.
If we surpass 6.8k-7k levels I will reconsider my plan for a drop at the current time.
So now the issue now for the bears is whether or not this little pump last night is going to cause more buyers to step in and take advantage of what appears to be the start of a new rally. Or maybe all these shorts coming down is a good sign for the bears and we won’t see the real short squeeze for a little bit longer.
With that said, the bearish signals I discussed above are all still in play. The right shoulder is becoming a bit more complete as long as price stays under 6,800 and the H&S is still in play on the daily view. The 200/400MA haven’t crossed yet so this is something to keep an eye on. Don’t forget that tomorrow we will get a decision from the SEC on the Proshares ETF which should have a significant effect on price once an announcement is made.
If we surpass 6.8k-7k levels I will reconsider my plan for a drop at the current time.
Comment:
9 Bitcoin ETF proposals have been rejected by the SEC citing concerns of manipulation and fraud of the Bitcoin markets as well as an inability to show evidence that bitcoin futures markets are "markets of significant size".
It's somewhat surprising this bad news hasn't driven the price down dramatically yet considering how many people have been awaiting the decision. Either way the future of crypto in terms of mainstream adoption seems shaky with all the manipulation we are seeing on a consistent basis and seemingly no solution in sight to prevent this from continuing to occur. Why would any investor want to risk their money in this type of market?
It's somewhat surprising this bad news hasn't driven the price down dramatically yet considering how many people have been awaiting the decision. Either way the future of crypto in terms of mainstream adoption seems shaky with all the manipulation we are seeing on a consistent basis and seemingly no solution in sight to prevent this from continuing to occur. Why would any investor want to risk their money in this type of market?
Comment:
Price is still following the fractal pretty nicely on the daily. It seems the 13EMA (dark blue) is acting as strong resistance here, keeping price down despite the bulls attempt to break it. Looking above we still have that 200MA and 400MA about to crossover. Might be another few days before that happens.
Comment:
Hey guys sorry for the late update, haven't been on my computer this weekend and won't be on until tonight. Just wanted to remind you that $6,800/6,900 range is the resistance that must keep price down in order for this idea to remain valid. There are several moving averages converging at that price range as well as the 0.382 fib level. The head and shoulders formation is still in play so we would like to start seeing price falling back down towards the low 6k range. The 200MA just crossed the 400MA, let's see if this results in downside over the next week. If the 6.8/6.9k level breaks we could see price move up towards the top of the descending trend line of this large channel (on daily).
Comment:
So bulls are clearly in control now and were able to succesfully break the 6.8/6.9k region that I was looking for opening my short order. Because it broke, I am no longer opening a short position on this yet. I am actually happy we didn't see a manipulated short squeeze to trigger this rally like we did on the last 2 bull rallies, shorts have come down naturally in response to a very organic price movement. This is the type of price action we like to see.
Anyways, now that this idea is invalidated I am looking towards $7,500 as my potential reversal target. This is in line with the 0.618 fib level (drawn from 5.8k to 8.5k) and also in line with the top of this descending wedge (on the daily) that you can see below in blue.
Right now the price is dealing with 89EMA (in magenta) on the daily. This needs to be broken if we want to see this rally continue.
Anyways, now that this idea is invalidated I am looking towards $7,500 as my potential reversal target. This is in line with the 0.618 fib level (drawn from 5.8k to 8.5k) and also in line with the top of this descending wedge (on the daily) that you can see below in blue.
Right now the price is dealing with 89EMA (in magenta) on the daily. This needs to be broken if we want to see this rally continue.
Comment:
Long term is still bearish, however I think this rally is not over yet. Check my new idea:
Comment:
More Bitcoin ETFs denied by the SEC yesterday, just as I assumed would happen. Their reasoning? "The reason the U.S. Security and Exchange Commission (SEC) has insofar denied crypto exchange traded funds (ETFs) is because the crypto industry does not fit the applicant archetype" Are we really surprised? They will continue denying ETFs until this market can somehow mature and do away with the manipulation and fraud.
As for TA, check my latest idea update. I think there's still a chance we see the bulls attempt to push price up towards this descending wedge but there's also a high chance that this rally is already over. Either way, regardless of the short-term I am still very bearish on the medium to long term and wouldn't be surprised to see the price eventually come back down to test the 6k region once again
As for TA, check my latest idea update. I think there's still a chance we see the bulls attempt to push price up towards this descending wedge but there's also a high chance that this rally is already over. Either way, regardless of the short-term I am still very bearish on the medium to long term and wouldn't be surprised to see the price eventually come back down to test the 6k region once again
Comment:
Price broke the 89 EMA like it was nothing. Now it looks like it's finding some support around the 0.236 fib level. I double that this holds either and we will see more downside. The severity of this drop is something we have not seen since the drop from 11.7k (second peak). Looks like that 200MA and 400MA bearish crossover I mentioned above is finally having its effect. This drop was triggered by yet another SEC denial of ETF proposals, but TA also supported a big drop was coming with the 0.618 resistance, descending trend line, and massive bearish divergences on multiple indicators.
If this support at the 0.236 fib doesn't hold, I think its very likely we will see the price break below 6k and see 5k or even 4k prices in the upcoming weeks.
If this support at the 0.236 fib doesn't hold, I think its very likely we will see the price break below 6k and see 5k or even 4k prices in the upcoming weeks.
Trade closed: target reached:
Okay so I was 3 months early with this analysis, with 2 solid months of consolidation but just look at where the price ended up at!! Pretty amazing, huh? :)
Exactly where I thought it would land if we ended up seeing more downside.
There could be a chance for reversal now from this point (see my latest idea), but please use tight stop losses and do not go all in on this trade!
Thanks for all your support guys, I really appreciate it!
Exactly where I thought it would land if we ended up seeing more downside.
There could be a chance for reversal now from this point (see my latest idea), but please use tight stop losses and do not go all in on this trade!
Thanks for all your support guys, I really appreciate it!