Bitcoin Setting Up for a 50-Day SMA Rejection

BITFINEX:BTCUSD   Bitcoin / U.S. Dollar
The picture is not yet perfect, but we are close. The rejection at the Moving Average will be confirmed with a daily close under $230. The chances of this happening are pretty high and once it does, the price and confidence should drop quickly.

There is very little support under $230 (the $223 Fibonacci on the 120 min chart, $213 recent low, and the round number of $200) All of them are fairly weak and the moving averages are clearly still trending down.

This entire set up is negated with a close above the recent highs of $243 which would also put it above the 50-day SMA . Without getting too greedy, look to take profits around $200 once the $230 level is broken to the downside. Though the chances of dropping under $200 are also pretty high.

Good Luck Traders.

Tone Vays
Twitter: @Tone_LLT
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Agree with your chart interpretation however contradicted by order books. BFX order book in particular looks very bullish. As I write same volume to climb $13 as to drop $3...
This might sound strange but i do not really consider how the book looks into TA analysis and forecasting... the order book is driven by confidence the moment you look at it and that confidence can flip at a moment's notice. Also there are more and more bot traders every day so the flipping of the book can happen instantly. Huobi just sent out a tweet that people are way more bullish then bearish at the moment (i'm not sure how it looks in relation to previous snapshots of bulls/bears) but people are way too bullish at the moment... I feel good about my shorts till $200-210.
+1 Reply
ditz ToneVays
Thanks that really helps. Been following order-books and indicators for some time trying to reconcile them. For example 3-4 days ago BFX order book flipped from bearish to bullish within hours with no substantive change in price or indicators that I could discern. Great to get an explanation which makes sense from someone much more experienced than myself.
+1 Reply
To clarify some more, the order book is useful short term. Like if you see a bunch of buyers all bunched up around a price say $225-230 but the selling is pretty spread out with small order in the $231-250 range. So that means it will take big sellers to drive it down and not much to drive it up. And even that can flip.

Also something to keep in mind is what was happening during the Evolution theft a month ago or so. When $12 million was stolen there was fear that those coins would flood the market. The selling was not that big at first but out of fear many traders took their bids off the table thus removing the buy side of the market. The price was dropping quickly but not because of big selling but because of no buying. Then when the price fell enough, the leveraged longs had to sell and selling ramped up late in the day but it did not start out that way.
+1 Reply
ditz ToneVays
Most interesting, thanks again. Guess the order book represents both genuine and masked sentiment, hence walls which look formidable can retreat or disappear. So for example, the current BFX order book may appear more bullish than it actually is.
"very little support under $230" are you serious? there is very strong support in the 216 area that did hold for 4 months now! I agree, if we break 210 there isn't much left besides doom. but so far it did hold pretty strong?!
Every technical analyst is different but to me, what you have just described is not a sign of strength, it's a sign of weakness. Even if i agree that $216 has been strong support for the last 4 months (i can say the same bout $223 but they are close enough, no reason to split hairs). the fact that it is constantly on the verge of being destroyed is kind of bad. We bounced off the lows in January ($166) all the way to $315 and ever since then we have made consistently lower highs. You can clearly see my obsession with Triangles and even though i do not have a descending triangle drawn over the last 4 months, you should be able to have a mental picture of it by now if as you say $216 is strong horizontal support and we have had highs of $315, $303, $260 and $243 the other day. We are running out of head room and that is why i do not see $210-223 as strong support 'anymore'. I did a month or two ago, but not now.

I need over $243 to go neutral, over $265 to be somewhat bullish and over $303 to be really bullish into year end.
+1 Reply
viajero ToneVays
thx for the clarification! interesting times for sure! only time will tell, if it's really a double bottom on the weekly and daily and we go past 243 or the bears will win this one again!
if we get close to 215-218 area we could potentially fail and drop under 200 in a doom scenario. Test 16x-19x area then lower potentially.
+2 Reply
I agree, I also wanted to publish a chart saying "Kiss of death with the 50 day moving average". But so far we haven't dropped, that's why I'm waiting for confirmation of this very bearish scenario.

We had already a kiss of death with the 100 day moving average a month ago :( I guess it has to get worse before it can finally get better.

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