With a bang, Bitcoin surges toward $8400 as we said it would!
Well good morning, traders. I hope you've been keeping up with me via Tradingview and our twice daily live streams. I don't normally make a lot of noise when I'm right, but I am going to take a moment here and say a few things. Many traders laughed when I said last night was not only possible, but becoming quite likely. I did a live stream not too long ago discussing the possibility that price was headed toward last night's high before correcting, rather than the opposite. The talking heads (those with the largest followings on social media) were saying that price must go down and reset at $6800 before heading higher. While I felt that way at first, as well, it became more apparent that price was headed up into the low-to-mid-$8500s. Permabears were saying that we were going to fail breaching the resistance line just like every time before. During last night's live stream I discussed the likelihood that we had been in reaccumulation and that we were most likely headed up and out but that it hinged on price's ability to breach the $7950 level. I have been saying that once through that area we were likely going to see FOMO kick in as shorts covered and went long. Now that we've done exactly that we have broken through the supply zone, the descending wedge's resistance line, and are well into the daily cloud. We also hit the target from the 12H pennant that had formed and it could be argued that we completed the larger IHS with a small right shoulder (volume expanded as did the price spread upon completion and breach of the neckline). This IHS pattern has price targeting $9620. Bitcoin dominance continues to grow and is currently hovering around 47% while total cryptocurrency marketcap has just reached $300 billion. At this point, we are seeing bearish divergence potentially forming on multiple time frames which suggests we may be at, or very near, the top of this run.
We are looking for a retracement now, but how far? A first thought would be the $7500 area, however I don't think that is very likely. It seems much more likely that price will only reach the $7800/$7900 level at the most which is right under the R1 pivot on the 4H TF. This was the previous supply zone which should be demand now. Experienced traders should be sitting there, right now, waiting for the retracement toward that zone in order to go long on the bounce. As I continued to mention in the weeks leading up to this price movement, that was a very significant area and, as such, should provide the same significance for support. It also provides confluence with the descending resistance line which should now be tested as support. Furthermore, it is the sweet spot within the daily cloud to see a bounce and ensuing breach of that cloud. Remember, price has not sat above the daily cloud (crypto settings, not default) since mid-January, so doing so should be very bullish. However, traders need to reign in their euphoria because we can still falter and head down. Traders should not feel overly confident until the February high around $11,800 is breached. Even then it is still possible for price to fall, but it just becomes much less likely at that point. Emotion, whether euphoric or depressive, will cause traders to lose money in the market. Risk management continues to be the name of the game.
We are looking for a retracement now, but how far? A first thought would be the $7500 area, however I don't think that is very likely. It seems much more likely that price will only reach the $7800/$7900 level at the most which is right under the R1 pivot on the 4H TF. This was the previous supply zone which should be demand now. Experienced traders should be sitting there, right now, waiting for the retracement toward that zone in order to go long on the bounce. As I continued to mention in the weeks leading up to this price movement, that was a very significant area and, as such, should provide the same significance for support. It also provides confluence with the descending resistance line which should now be tested as support. Furthermore, it is the sweet spot within the daily cloud to see a bounce and ensuing breach of that cloud. Remember, price has not sat above the daily cloud (crypto settings, not default) since mid-January, so doing so should be very bullish. However, traders need to reign in their euphoria because we can still falter and head down. Traders should not feel overly confident until the February high around $11,800 is breached. Even then it is still possible for price to fall, but it just becomes much less likely at that point. Emotion, whether euphoric or depressive, will cause traders to lose money in the market. Risk management continues to be the name of the game.
Comment:
By the way, the high on this run up is also the 61.8 fib of the entire movement from the April high to the June low which gives us a 50% fib at $7872.50. As I mentioned in the live stream, it appears that Bitcoin is making a move out of the accumulation it has been in through June and July, which means that alts should be moving into accumulation. The biggest clue for alts was the sudden SC recently whereby we saw many alts take a large hit. We can expect alts to pump a bit to complete the AR as Bitcoin consolidates/corrects after its large movement/SOS. In the much larger picture, Bitcoin is still within the accumulation phase but potentially working its way out. We need to see price breaching $11,800 to witness an effect on the larger TF that is similar to what we just saw last night.
Comment:
Currently watching to see if this 4H pennant plays out. It would target the $8830/40 area, which is the R5 pivot on that time frame.
