No one can guess the market with 100% accuracy. However, we can look at evidence and build probabilities and when a market does what you expect, you can use that to set up a trade.
I use price action, patterns, supply/demand, cycles and timing tools to look for market pivots. If my tools get me close then I'll make really profitable trades. If my tools are wrong, which they will be at times, I will get stopped out. That's trading.
When we were at $9900 we hit major resistance, had a major fib level AND it was day 29 of the bitcoin 30 day cycle. That gave me huge confidence in taking a big short position, which was very profitable.
However, when we pulled back at the .618 fib and started finding support, I thought there was a 50-50 chance we would go higher and wanted to be positioned. Despite having a generally bearish bias, I did not want to miss a 3rd wave up. I took a long because I liked the risk vs. reward. In this case, I got stopped out and took a small short position. I could have stayed short and been more profitable, but it went against my expectations that we would see a large down move at this stage in the bear market.
Bitcoin became severely oversold in the middle of a cycle and I've been waiting for the next set up to go long. I think we are getting close now. We are on day 28 of the 30 day cycle. We had a low on day 23 which would be an early cycle low but its possible, so I have to remain open. However, I expect a low is more likely in the next 5 days.
There are 2 things that I expect are most likely happen (not guaranteed by any chance):
1. We break this resistance at $7600. This would set up some open area to $8000 then $7600 would become support. If we stayed above $7600 for more than 3-4 days I would start to consider that day 23 was the low and I'd be looking to set up a short position. As I'm writing this we just broke a wedge, so don't think this will happen
2. We make a lower low in the next 1-5 days. This has a high probability of being a cycle low so we look for reversal signs to go long.
So over the next few days I really want to see sub $7000. I think that would flush out everyone and get rid of a lot of bulls. In my cycles updated, I noted that everyone is looking for June 6th low and the market usually doesn't give it away that easy so I think a low before then would make more sense. But we'll see.
I don't believe we'll go under $6500 but if we do break it we could get a strong spike lower as that would be major support so you can't just blindly buy any low. We'll look for reversal signals.
Can we just boom up? Absolutely. If we eventually can get over $8800 I would start looking for a bullish daily cycle. I would generally look for resistance to break then look to buy a pullback. Sometimes that is happens and thats just part of trading. You adjust expectations and form a new trading plan. I would rather see us go bullish as its easier to trade, I just don't think its as likely just yet.
So let's see what happens here. If the market comes close to my expectations then I'll have a chance at a good trade set up. If not, then I'll patiently wait until it provides me the right set up.
I use price action, patterns, supply/demand, cycles and timing tools to look for market pivots. If my tools get me close then I'll make really profitable trades. If my tools are wrong, which they will be at times, I will get stopped out. That's trading.
When we were at $9900 we hit major resistance, had a major fib level AND it was day 29 of the bitcoin 30 day cycle. That gave me huge confidence in taking a big short position, which was very profitable.
However, when we pulled back at the .618 fib and started finding support, I thought there was a 50-50 chance we would go higher and wanted to be positioned. Despite having a generally bearish bias, I did not want to miss a 3rd wave up. I took a long because I liked the risk vs. reward. In this case, I got stopped out and took a small short position. I could have stayed short and been more profitable, but it went against my expectations that we would see a large down move at this stage in the bear market.
Bitcoin became severely oversold in the middle of a cycle and I've been waiting for the next set up to go long. I think we are getting close now. We are on day 28 of the 30 day cycle. We had a low on day 23 which would be an early cycle low but its possible, so I have to remain open. However, I expect a low is more likely in the next 5 days.
There are 2 things that I expect are most likely happen (not guaranteed by any chance):
1. We break this resistance at $7600. This would set up some open area to $8000 then $7600 would become support. If we stayed above $7600 for more than 3-4 days I would start to consider that day 23 was the low and I'd be looking to set up a short position. As I'm writing this we just broke a wedge, so don't think this will happen
2. We make a lower low in the next 1-5 days. This has a high probability of being a cycle low so we look for reversal signs to go long.
So over the next few days I really want to see sub $7000. I think that would flush out everyone and get rid of a lot of bulls. In my cycles updated, I noted that everyone is looking for June 6th low and the market usually doesn't give it away that easy so I think a low before then would make more sense. But we'll see.
I don't believe we'll go under $6500 but if we do break it we could get a strong spike lower as that would be major support so you can't just blindly buy any low. We'll look for reversal signals.
Can we just boom up? Absolutely. If we eventually can get over $8800 I would start looking for a bullish daily cycle. I would generally look for resistance to break then look to buy a pullback. Sometimes that is happens and thats just part of trading. You adjust expectations and form a new trading plan. I would rather see us go bullish as its easier to trade, I just don't think its as likely just yet.
So let's see what happens here. If the market comes close to my expectations then I'll have a chance at a good trade set up. If not, then I'll patiently wait until it provides me the right set up.
Comment:
Obviously its a good IHS that formed so if we break up I expect it can run fairly high for a few days so I will go long on a break upwards
Comment:
The IHS is in play here. Now we find out if there are enough bulls to take it higher. If we get a clear break up, it actually has room to run. I'm not in a trading position and just waiting to see what happens.
Bulls need to get a high volume break. We had a small volume green bar but again we aren't seeing the conviction you would want to see at a major bottom. Its not too late but we really want to see volume spikes and then a real big volume candle that breaks and starts running up. Otherwise if we just go sideways here without buyers to step in, the IHS will fail, so be cautious.
Bulls need to see consolidation here then a break up over $7700 and really don't want to see it drop below $7500 again. Another drop with volume and I think buyers will get scared and we'll start downtrending.
The IHS is in play here. Now we find out if there are enough bulls to take it higher. If we get a clear break up, it actually has room to run. I'm not in a trading position and just waiting to see what happens.
Bulls need to get a high volume break. We had a small volume green bar but again we aren't seeing the conviction you would want to see at a major bottom. Its not too late but we really want to see volume spikes and then a real big volume candle that breaks and starts running up. Otherwise if we just go sideways here without buyers to step in, the IHS will fail, so be cautious.
Bulls need to see consolidation here then a break up over $7700 and really don't want to see it drop below $7500 again. Another drop with volume and I think buyers will get scared and we'll start downtrending.
Comment:
Bitcoin broke up and is in the process of completing this IHS. Measured move would be about $8100 but there is key resistance around $7950 that could hold it back. It's also wedging its way up on light volume so we still haven't the type of conviction that would get me excited about this move. That doesn't mean it can't keep going up.
I didn't have a position. I was long but took profits as I felt the risk of a lower low was too high. Even though I was originally looking for a strong bottom to go long, I may not get it.
If we go straight up from here I'll look to go short. If we have a pullback before we get much higher, I'll look for a long, but I still need to be cautious as there is l room on this cycle to have one more lower low.
Bitcoin broke up and is in the process of completing this IHS. Measured move would be about $8100 but there is key resistance around $7950 that could hold it back. It's also wedging its way up on light volume so we still haven't the type of conviction that would get me excited about this move. That doesn't mean it can't keep going up.
I didn't have a position. I was long but took profits as I felt the risk of a lower low was too high. Even though I was originally looking for a strong bottom to go long, I may not get it.
If we go straight up from here I'll look to go short. If we have a pullback before we get much higher, I'll look for a long, but I still need to be cautious as there is l room on this cycle to have one more lower low.
Comment:
As we struggled yesterday and eventually broke down out of the wedge and broke below the IHS neckline so that pattern is now invalid. I took a short, but not a big position as I was looking to add to it at $7950 and we never go there.
I'm not that confident we are going to make new lows. So my stop is break even. If this remains a fairly controlled drop, then I'll look for support at the fibs and the wedge touch. Good chance I go long there.
If we see some aggressive red candles today and strong selling then I'll hold onto my short position. In other words, I don't have any buy orders in and want to see how this trades before I make a decision. I believe its more likely we find support and make another run to $8k, but I still want to be ready for a lower low.
As we struggled yesterday and eventually broke down out of the wedge and broke below the IHS neckline so that pattern is now invalid. I took a short, but not a big position as I was looking to add to it at $7950 and we never go there.
I'm not that confident we are going to make new lows. So my stop is break even. If this remains a fairly controlled drop, then I'll look for support at the fibs and the wedge touch. Good chance I go long there.
If we see some aggressive red candles today and strong selling then I'll hold onto my short position. In other words, I don't have any buy orders in and want to see how this trades before I make a decision. I believe its more likely we find support and make another run to $8k, but I still want to be ready for a lower low.
Comment:
You have to be careful about using a 5 minute chart, but the price action the last hour looks promising. What do we have:
1. We hit the .618 and got strong buying. That long wick was buy volume.
2. It consolidated for 20 minutes then we've had 3 white solidiers on the 5, showing steady buy volume.
We need to see how this plays out. If this type of price action continues, I will be looking to close my short and take a shot at going long with a stop around $7300 where I'd likely just flip back short if that failed.
Hoping to get a small pullback here to get a better position, but I could see a squeeze happening so have to be careful.
You have to be careful about using a 5 minute chart, but the price action the last hour looks promising. What do we have:
1. We hit the .618 and got strong buying. That long wick was buy volume.
2. It consolidated for 20 minutes then we've had 3 white solidiers on the 5, showing steady buy volume.
We need to see how this plays out. If this type of price action continues, I will be looking to close my short and take a shot at going long with a stop around $7300 where I'd likely just flip back short if that failed.
Hoping to get a small pullback here to get a better position, but I could see a squeeze happening so have to be careful.
Comment:
Bingo..
Keep in mind I was short, had a bearish view but price action told a different story and I got out of a short and into a long before the squeeze. We'll see if it lasts, but this is why you NEVER want to carry a bias and listen to what the charts tell you.
Lets see if it holds now. :)
Bingo..
Keep in mind I was short, had a bearish view but price action told a different story and I got out of a short and into a long before the squeeze. We'll see if it lasts, but this is why you NEVER want to carry a bias and listen to what the charts tell you.
Lets see if it holds now. :)
Comment:
Another good sign you'll see on this hourly chart. We had a pickup in volume from buyers at the low and a lack of sellers. Then good volume on the break up. But even more important, we have a small red candle with high volume. But that red candle has held higher prices. This means that there were sellers at the top but plenty of buyers ready to eat those sell orders.
The bar pattern is what I hope to see next. If this is a real bull move then we will see a flag form this afternoon and then hopefully get at least a small pop near the end of the day. Closing near highs of the day is a bullish sign.
After that we want to see a continuation of flag, flagpole. We want to signs of buyers accumulating on bull flags then busting through resistance.
The patter isn't what will happen but just an example of what I would like to see happen since i'm in a long position.
Another good sign you'll see on this hourly chart. We had a pickup in volume from buyers at the low and a lack of sellers. Then good volume on the break up. But even more important, we have a small red candle with high volume. But that red candle has held higher prices. This means that there were sellers at the top but plenty of buyers ready to eat those sell orders.
The bar pattern is what I hope to see next. If this is a real bull move then we will see a flag form this afternoon and then hopefully get at least a small pop near the end of the day. Closing near highs of the day is a bullish sign.
After that we want to see a continuation of flag, flagpole. We want to signs of buyers accumulating on bull flags then busting through resistance.
The patter isn't what will happen but just an example of what I would like to see happen since i'm in a long position.
Comment:
At the same time, here is an example of price action we DO NOT want to see.
In this situation, you would get very choppy upwards moving channel. Often its a rounded top that would end up forming a right shoulder. Usually lower volume and any breaks up get sold into fast.
This type of price action would get me cautious and I'd likely move my stop up and maybe even close my long.
Again, this isn't a prediction but an example of how price action can change the probability of an expected outcome.
At the same time, here is an example of price action we DO NOT want to see.
In this situation, you would get very choppy upwards moving channel. Often its a rounded top that would end up forming a right shoulder. Usually lower volume and any breaks up get sold into fast.
This type of price action would get me cautious and I'd likely move my stop up and maybe even close my long.
Again, this isn't a prediction but an example of how price action can change the probability of an expected outcome.
Comment:
Panning out on the 4 hour, we also can determine the areas of supply and demand. As we can see, we are at strong resistance where there was a lot of buy and sell volume, so it makes sense that we will consolidate in this area.
Breaking above $7600, staying above that area and closing above there would get bitcoin above a very critical supply area. That would be very bullish.
If it gets past $7700 I think the remaining sellers would start to cover as the volume above this area is very thin, meaning that no sellers are there to protect their short position. it could be a quick run to $8300. And thats where I'm hoping to carry this long position.
The battle at $7600 has started so now we see if bulls can conquer this level. A close above there and continued bullish price action and I'll add to longs.
Panning out on the 4 hour, we also can determine the areas of supply and demand. As we can see, we are at strong resistance where there was a lot of buy and sell volume, so it makes sense that we will consolidate in this area.
Breaking above $7600, staying above that area and closing above there would get bitcoin above a very critical supply area. That would be very bullish.
If it gets past $7700 I think the remaining sellers would start to cover as the volume above this area is very thin, meaning that no sellers are there to protect their short position. it could be a quick run to $8300. And thats where I'm hoping to carry this long position.
The battle at $7600 has started so now we see if bulls can conquer this level. A close above there and continued bullish price action and I'll add to longs.
Comment:
Showing more strength so the bull flag really hasn't started. This is a good sign. Good volume on this move.
However, we just backtested the wedge line. Not an uncommon spot to get sellers. We need to see the flag form here. Again, staying above $7600 is good. If we get a bunch of wick selling then go much lower the next 8 hours thats when we have to worry, but so far so good.
Showing more strength so the bull flag really hasn't started. This is a good sign. Good volume on this move.
However, we just backtested the wedge line. Not an uncommon spot to get sellers. We need to see the flag form here. Again, staying above $7600 is good. If we get a bunch of wick selling then go much lower the next 8 hours thats when we have to worry, but so far so good.
Comment:
Unfortunately, price action went sideways, we had 2 tests of the wedge line and failed to pickup buyers at resistance. This has led to a drop back down.
Now we find out of any buyers are looking to buy the dip. Unfortunately, on this first drop we have got no buyers. I think $7400 is dangerous. This could be forming a HS. I'm stopped out of part of my position but I will fully stop out at break even.
Unfortunately, price action went sideways, we had 2 tests of the wedge line and failed to pickup buyers at resistance. This has led to a drop back down.
Now we find out of any buyers are looking to buy the dip. Unfortunately, on this first drop we have got no buyers. I think $7400 is dangerous. This could be forming a HS. I'm stopped out of part of my position but I will fully stop out at break even.
Comment:
Bitcoin quickly recovered the drop and is back in a bullish posture.
I'd like to see this flag, then break up with some volume and clearly $7700 range near $7800. If that happens then I think we could see a big break up towards $8300.
If we make a rising channel and continue to get sold hard every time we try to get to $7700, I would be wary that this move has no buyers and we make our descent down.
The 2 blue lines are the range. Above the top and we could see good bullish movement. Drop below $7350 and I think its in trouble.
I generally favor a bullish outcome because we are already on day 32 so its too late to see a new low. If day 23 was the low and we roll over here, it would mean trouble. I would not buy a new low at this point in time.
Bitcoin quickly recovered the drop and is back in a bullish posture.
I'd like to see this flag, then break up with some volume and clearly $7700 range near $7800. If that happens then I think we could see a big break up towards $8300.
If we make a rising channel and continue to get sold hard every time we try to get to $7700, I would be wary that this move has no buyers and we make our descent down.
The 2 blue lines are the range. Above the top and we could see good bullish movement. Drop below $7350 and I think its in trouble.
I generally favor a bullish outcome because we are already on day 32 so its too late to see a new low. If day 23 was the low and we roll over here, it would mean trouble. I would not buy a new low at this point in time.
Comment:
We got the red channel as I was looking for yesterday which I believe is a more bullish flag consolidation. So I'm looking for a strong break on volume. Getting past this $7700 really should open up much higher prices.
There has been very little volume from here to $8200 and I think a break up on volume and shorters would likely give up and put their sell orders at $8200-$8500. This is a great opportunity for bulls to kick up price. We have the weekend coming up, which tends to be green.
Fow now I'm bullish. Still have a partial long and waiting for a volume break to add to this trade. But if there is just too much selling, price could drop again and try to retest the lower range around $7300.
We got the red channel as I was looking for yesterday which I believe is a more bullish flag consolidation. So I'm looking for a strong break on volume. Getting past this $7700 really should open up much higher prices.
There has been very little volume from here to $8200 and I think a break up on volume and shorters would likely give up and put their sell orders at $8200-$8500. This is a great opportunity for bulls to kick up price. We have the weekend coming up, which tends to be green.
Fow now I'm bullish. Still have a partial long and waiting for a volume break to add to this trade. But if there is just too much selling, price could drop again and try to retest the lower range around $7300.
Comment:
Still holding a long position as long as we stay in this channel, but if we drop out, I'll get out and just wait to see what happens.
Generally speaking, I'm expecting a retest to that $8200 area. But if bitcoin is so weak that the best it can do is a small bounce to $7700, then there is a risk of much lower prices.
$7450 area would be below the line and an hourly close would have me closing longs. At $7350 I'm opening a small short which would be more of a protective position against some long term holds.
Still holding a long position as long as we stay in this channel, but if we drop out, I'll get out and just wait to see what happens.
Generally speaking, I'm expecting a retest to that $8200 area. But if bitcoin is so weak that the best it can do is a small bounce to $7700, then there is a risk of much lower prices.
$7450 area would be below the line and an hourly close would have me closing longs. At $7350 I'm opening a small short which would be more of a protective position against some long term holds.
Comment:
If you just pan out and look the price action from the May 28 low, its easy to see that we have a very weak rally that has taken 12 days to move $700 and has been unable to get past sellers at $7700. This is very bearish considering how oversold the market was at $7000.
Time is always an issue and when a market takes this long to make its move up, I start to get cautious. And I'm a bit surprised at continued weakness during the weekend as we usually make gains on weekends.
Bitcoin needs to hold the parallel channel and move past $7700 very soon. If we break below it, I would expect to go to $7300 and probably retest $7000 area and the major triangle trendline. If that fails, then we could see some aggressive selling.
This is one of my longest posts I've made as the market hasn't done anything. The last 2 weeks is some of the lowest volatility we've seen. Traders need volatility to make money and usually bitcoin is great for that, but not right now. So really nothing to do but watch and wait for a break of this sideways action.
If you just pan out and look the price action from the May 28 low, its easy to see that we have a very weak rally that has taken 12 days to move $700 and has been unable to get past sellers at $7700. This is very bearish considering how oversold the market was at $7000.
Time is always an issue and when a market takes this long to make its move up, I start to get cautious. And I'm a bit surprised at continued weakness during the weekend as we usually make gains on weekends.
Bitcoin needs to hold the parallel channel and move past $7700 very soon. If we break below it, I would expect to go to $7300 and probably retest $7000 area and the major triangle trendline. If that fails, then we could see some aggressive selling.
This is one of my longest posts I've made as the market hasn't done anything. The last 2 weeks is some of the lowest volatility we've seen. Traders need volatility to make money and usually bitcoin is great for that, but not right now. So really nothing to do but watch and wait for a break of this sideways action.
The wedge broke down but after sitting at $7400 all day, not enough down momentum, so now it will try to break the upper resistance. This is an area where breaking $7600 with some volume likely takes us to $7900 and the day 23 cycle would likely be confirmed, making it an early cycle low. It will take another week to confirm that though.
If we fail here, then I'll be looking for that low to form. Its a set up where you can buy the break up or break down if you get volume and look to add to your position on a backtest