Happy Tuesday. The expected Upward Thrust (UT) in Phase C did appear, and it came with both the volume and PA one would expect for a bullish move up. The larger question is – does this mean the formation is bullish rather than distributive?
Looking at the 15M Intraday Chart, it appears as though the formation had a bullish breakout with Move 1 taking the PA to the $9,620.00 price handle, followed by a textbook formation of a Back-Up/Last Point of Supply (BU/LPSY) to the resistance line at the $9,560.00 price handle, and a subsequent surge from Move 2 to a Buying Climax (BC) at the $9,780.00 price handle.
The recent move raised some red flags since the full cause built into the formation during consolidation was not exhausted. This would suggest supply is disproportionately higher than demand at this price point, and a turn lower in the PA should happen. The built-up cause should have ended with a Buying Climax at $10,420.00, but the PA has stopped well short of that price handle, which is a significant red flag. Moreover, since the Buying Climax at $9,780.00 on the 15M Intraday, the formation has not managed to break the $9,720 price handle on upward PA swings and has formed a Bearish Triple Bottom which did break the support line, bounced off resistance at $9,580.00 (potentially signaling support) and recovered to $9,680.00 price handle. Since recovering, it appears the formation is moving into a classic Phase A Wyckoff consolidation pattern on the 15M chart at the time of this writing.
Looking at the 4H Intraday Chart, the Upward Thrust After Distribution (UTAD) which took the PA from $9,280.00 to the $9,780.00 price handle, unambiguously signaled the formation has entered Phase C of a Wyckoff Distribution.
If the formation is, in fact, making a bullish move rather than a distributive bull trap, I would have expected two strong moves up to $10,420.00 on strong volume, which would bookend a Back Up to form a Last Point of Supply (BU/LPSY) right around resistance at $9,580.00 (Move 1 -> BU/LPSY -> Move 2). The formation had a strong Move 1 on solid volume (11.748K) to $9,780.00 and performed a textbook Backup/Last Point of Supply (BU/LPSY) exactly to the resistance line at $9,580.00. However since that time, the formation has failed to generate any real volume in over 8 hours (1.397k) or surge past $9,780.00 to exhaust the remaining cause at or near the Target Price of $10,420.00. This is beginning to look more like a very well executed bull trap. Also, there may be some fundamental evidence to support this narrative.
On the fundamental side, Onchain Analyst Cole Garner posted an infographic on his Twitter account about the recent spike in BTC miner outflows overnight.
If this is true, it would suggest miners which were initially hoarding BTC waiting for PA to move higher post halving have hit capitulation and are unable to continue holding their BTC in anticipation of a higher price. This also may explain Preliminary Supply (PSY) flooding the market at the $9,720 handle, which halted the PA rise.
On 1D chart, after forming a “Creek” of descending PA and increased volume, the Upward Thrust After Distribution (UTAD) signaled a move into Phase C of a Wyckoff Distribution (again arguably the most volatile of the Wyckoff Phases).
Something of note - the Upward Thrust After Distribution (UTAD) which formed at the Jump Across the Creek, failed to rise to at least the lower line of resistance at the $9,940 price handle. This would suggest supply has entered the market which is disproportionately greater than demand at this price range, and lower PA should be on the table soon. However, since the formation is in Phase C, Upward Thrusts After Distribution (UTAD) are normal and should be expected. It is possible we could see a move higher to $10,420 if the full cause is exhausted on this current move before a move back down into the normal trade range.
Summary/Trade Plan
In my mind, the recent PA feels more like a bull trap rather than a bullish move up.
The trade plan is to enter a short position Somewhere in the $9,680.00 - $9,650.00 region with a Stoploss at the $9,730.00 price handle. The Target Price for the short position would be $8,820.00. Should the Stoploss trigger, and a move higher ensue, I would take a long position at the $9,765.00 price handle with a Target Price of $10,420.00 on the move higher.
One other thing. Where did you take count for $10,420 form? Didn't we hit that on 1st June?
FOFAgent1
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@derrybit, the count for the Upward Price Target of $10,420.00? The count on that started from the 4H Intraday Selling Climax (SC) with a low of $8,900.00 on my chart (19 Boxes x $20 Box Size x 3 Box Reversal) + $9,280 (the low on the potential Last Point of Support (LPS)). On PA movies upward, the 2/3 rule does not apply - only on moves down. Does that make sense?
derrybit
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@FOFAgent1, No, perfect sense. So; on 15m interval I see 10 boxes (at most) which would give target of 9500 (600) - the high of the next AR (BC) was 9580??? p
Have you ever tried StockCharts or Updata - I'm doing some backtesting on them plus TV to determine which is better.
FOFAgent1
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@derrybit, That would be correct on the about the variance you're seeing on the 15M Intraday. Point and Figure can be somewhat challenging at times because two variables come into play - correct box size and correct reversal value.Keep in mind, Target Price projections are not hard targets hit every time - there is a delta of sorts because it is an approximation of human nature/trading psychology/institutional intent.
From my own experience, I think it's important to identify your trading style before deciding which timeframe to nail down box size and reversals for consistent Target Price Projections - otherwise you could be wasting a ton of time to dial in minimal gains. In my case, I swing trade and I'm only really interested in targeting moves which can net me 10% or higher on relatively low leveraged trades (5x or lower). Many would consider that too conservative, but filtering for those trades specifically keeps my fees low, keeps me from spreading my capital too thin across nothingburger returns/losses (after commissions and fees) and lets me focus my attention.
I use the BTC/USD 4Hour Intraday as my primary source of information, my chart to project Target Price and to build my trading plan from. It can generally come within $20 of both tops and bottoms, but I always add or subtract $60 to the Target Price Projection (depending upon direction) to have a reasonable guarantee sells and buys will be hit. The 15M Intraday I use to Identify underlying trends, trend reversals and Wyckoff Phases within the context of the 4H Intraday (which is why both have the same box size and reversal values). I use the 1D exclusively to see the larger macro trend in play and provide a reasonableness test to PA, the trade plans price projections, etc. (which is why it also has the same box size and reversal values). As you can see - initiating coverage on a new token using this method takes a bit of time, but the maintenance is easy after its done.
I'm just about ready to initiate coverage on Ethereum in the near future. I still have a few more tweaks to push through, then I should be good to start publishing. Hope the explanation made some sense, clears up how I use the three charts together and calculate my Target Price.
derrybit
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@FOFAgent1, That's exactly my intention and thanks to you & your charts I've been able to find some missing pieces of the puzzle! You did say you used 4HR as main chart for counts but I could only see two columns on the 4HR - so; you are obviously taking a different type of count which I think I can see now if it's 19 bars. Yes, discipline required in annotation for different structures and sub-structures et. Thanks for taking time to reply - gotta go - dinner burning!!! Peter
derrybit
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@derrybit, Sorry, hate not understanding something and at the risk of pissing you off, trying to teach you to suck eggs, this is where I think we differ on that count. I wouldn't count the whole Re-Distribution structure - 19 bars (I treat it as Accumulation Phase A, Distribution remainder but with an Accumulation element within the latter) - so; I only count the Accumulation element of it (9 bars) to get a target for the UTAD. It's what I've used in past and it seems to work - actually posted the target a few days ago - the attached should help explain. Good night. Peter
....mmmhhh interesting. It takes me a while to digest your posts and I need to go make dinner! but I have that UTAD as the breakout a Re-Accumulation pattern with target of 9846ish and we are now in another smaller Re-Acc. pattern for last leg up. We'll see - could be wrong - need to look at in more detail. cheers p
FOFAgent1
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@derrybit, I'm leaving the possibility open another leg up could be in the cards, but the two glaring pieces which make me look at this move as more of a bull-trap are 1) the inability to fully exhaust the built in cause on the move up after consolidation, 2) the spike in miner liquidations, and 3) the serious drop off in volume for the second leg follow through for the Buying Climax (BC) on the 4H Intraday. I could be wrong and I'm open to that idea, hence the hedge buy after a potential stoploss trigger at $9,765.00. I suppose we should find out soon enough. I'll be looking to see if resistance at $9,580.00 breaks anytime soon.
derrybit
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@FOFAgent1, I think it is a Bull trap but at the moment looking like it's running out of steam early - expect spike. There is Outflow from Miners but as yet not showing on Inflows to Exchanges -( last time I checked). Volume can fall off due to weak hands buying in before final flurry up. This could range until tomorrow. p
FOFAgent1
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@derrybit, Do you have a specific website you check for Inflows/Outflows? I'd be curious to see it if you'd care to share it. I'd also be curious to see if it captures OTC orders as well.