In 2017, I mentioned that bitcoin's chart looked a lot like Silver's parabola. In early 2018, I discussed how we were would likely move into a low to find a bottom and start to form a cup. I expected bout 9 months so I was close to 3 months too soon somewhere around $4000. I got the shape and price very close just a bit short on time.
Parabolas tend to have common traits. They slowly climb, then the incline gets steeper and then they shoot up. Have a big nasty drop, slight recovery then another nasty drop and then they fall into a flat trend. It looks like a ski jump. And they can occur in multiple time frames.
Now in 2019, we have ourselves another parabola on a shorter time frame. We've already had the big first move down that tells us it could be over. Of course, we could still have a move to $10k, but my guess is that its probably over and we'll work our way down into another low volatility range.
Nothing I say here is a guarantee. Bitcoin trades differently than other assets and its possible that new buyers are in this market and we will just take off. I think you need to be long bitcoin in the long term.
The reason I'm writing about this as I've only seen a few other people mention it, such as Phil (Pro Indicators). Most people seem to think we'll pull back 50% and shoot right up to new highs later this year. Others think we'll just crash. I think its most likely that its in between. A pullback and grind sideways for a long time to digest the gains and allow more time to accumulate. Possibly get stuck in a range between $4k and $5k for 3-6 months.
The real question is this. Do you have a plan of how to trade this if it happens? Are you comfortable with buying $7300 if we drop to $4000? Are you OK if this pump is over and we slowly grind into a low volatility grind for month? Its not about being right or wrong but being mentally prepared. I was 100% mentally prepared for a big drop when we were over $15k. I sold at $15500. I shorted at $13k and I was clearly looking for sub $5k in early 2018 that would come in the fall. I didn't know it would take to December and didn't know it would go to $3k.
But here I am again, ready for $4k, ready for a slow grind to come back. If we find support and shoot up, then thats fine by me. I'm holding BTC and ETH long term and I'll look to trade breakouts is we stay bullish. But as a swing trade, I will wait. And if we start to form this type of slope, then I will know what to expect.
Parabolas tend to have common traits. They slowly climb, then the incline gets steeper and then they shoot up. Have a big nasty drop, slight recovery then another nasty drop and then they fall into a flat trend. It looks like a ski jump. And they can occur in multiple time frames.
Now in 2019, we have ourselves another parabola on a shorter time frame. We've already had the big first move down that tells us it could be over. Of course, we could still have a move to $10k, but my guess is that its probably over and we'll work our way down into another low volatility range.
Nothing I say here is a guarantee. Bitcoin trades differently than other assets and its possible that new buyers are in this market and we will just take off. I think you need to be long bitcoin in the long term.
The reason I'm writing about this as I've only seen a few other people mention it, such as Phil (Pro Indicators). Most people seem to think we'll pull back 50% and shoot right up to new highs later this year. Others think we'll just crash. I think its most likely that its in between. A pullback and grind sideways for a long time to digest the gains and allow more time to accumulate. Possibly get stuck in a range between $4k and $5k for 3-6 months.
The real question is this. Do you have a plan of how to trade this if it happens? Are you comfortable with buying $7300 if we drop to $4000? Are you OK if this pump is over and we slowly grind into a low volatility grind for month? Its not about being right or wrong but being mentally prepared. I was 100% mentally prepared for a big drop when we were over $15k. I sold at $15500. I shorted at $13k and I was clearly looking for sub $5k in early 2018 that would come in the fall. I didn't know it would take to December and didn't know it would go to $3k.
But here I am again, ready for $4k, ready for a slow grind to come back. If we find support and shoot up, then thats fine by me. I'm holding BTC and ETH long term and I'll look to trade breakouts is we stay bullish. But as a swing trade, I will wait. And if we start to form this type of slope, then I will know what to expect.
Comment:
OK.. we had a recovery and pop up to $9k. There a few signs that show me we are a close to topping out.
First, we can't move up unless its a weekend. Volume is weakening. Consolidations are taking longer. And time is due for a cycle low. I don't see many people shorting and most of them are looking for $9500-$11k which makes me think most will miss the short opportunity.
For that reason I am starting a short position at $8700 and I will look to add if we approach $9400. If we clear that area and show strength, I will likely take my trade off and try again at $10k and $11k. This type of trade takes patience because we could get a blog off top.
But I'm looking at a 1-4 month view here and expect a test of the 50DMA and lower. $6k area would be my target.
Warning. Do not make this trade if you can't sit in a loss. And if you can't handle the marketing going up with people on twitter being crazy bullish and talking about $20k.
OK.. we had a recovery and pop up to $9k. There a few signs that show me we are a close to topping out.
First, we can't move up unless its a weekend. Volume is weakening. Consolidations are taking longer. And time is due for a cycle low. I don't see many people shorting and most of them are looking for $9500-$11k which makes me think most will miss the short opportunity.
For that reason I am starting a short position at $8700 and I will look to add if we approach $9400. If we clear that area and show strength, I will likely take my trade off and try again at $10k and $11k. This type of trade takes patience because we could get a blog off top.
But I'm looking at a 1-4 month view here and expect a test of the 50DMA and lower. $6k area would be my target.
Warning. Do not make this trade if you can't sit in a loss. And if you can't handle the marketing going up with people on twitter being crazy bullish and talking about $20k.
Comment:
After this volatility and failed break out I now have a good price area to watch. The resistance we have here is the weekly open and its now strong resistance. I am short and will stay short unless we recover the weekly open, get at least an hourly close over and make that area support. Then I'll cover and look for shorts in the $9400 range.
After this volatility and failed break out I now have a good price area to watch. The resistance we have here is the weekly open and its now strong resistance. I am short and will stay short unless we recover the weekly open, get at least an hourly close over and make that area support. Then I'll cover and look for shorts in the $9400 range.
Comment:
What we have now is a shakeout that is a reversal of a reversal. The $1000 drop gives this market plenty of fuel to go higher if we break this critical $8750 area. If this pops over and flips SR, then I think we go higher.
Psychologically the bears that short this become dejected. The bulls that sold FOMO back in and this sets up another move higher.
I closed my short and actually have a long when we failed to break yesterday's lows the 2nd time and I have a stop at those lows. I likely add if we break AND forms support above this range. $9400 first target, but wouldn't be surprised if goes much higher
I will not blindly short and I am in no hurry to short because it is set up for a blow off top which means it could easily go much higher. Need to see the reaction if we go higher and watch how it trades before I try again.
What we have now is a shakeout that is a reversal of a reversal. The $1000 drop gives this market plenty of fuel to go higher if we break this critical $8750 area. If this pops over and flips SR, then I think we go higher.
Psychologically the bears that short this become dejected. The bulls that sold FOMO back in and this sets up another move higher.
I closed my short and actually have a long when we failed to break yesterday's lows the 2nd time and I have a stop at those lows. I likely add if we break AND forms support above this range. $9400 first target, but wouldn't be surprised if goes much higher
I will not blindly short and I am in no hurry to short because it is set up for a blow off top which means it could easily go much higher. Need to see the reaction if we go higher and watch how it trades before I try again.
Comment:
To update this, I closed my longs because I've made so much profit I want to protect it. I have a hedge shot but its fairly small and balances my spot holdings more than anything.
I still think we are at risk of a bigger drop then a curved correction. It could start here, $11600, $12k, $13k, $15k. I'd be surprised to see it go much higher but in a mania phase its hard to call a top.
I do know that markets always correct. In a mania, you run out of buyers. Big money keeps pumping then lets the FOMO buyers take it higher. But you eventually run out of liquidity. Also, there is a TON of money to be made shorting a correction. This is part of the reason you are seeing these big moves probing for buyers. Markets just don't keep going straight up.
All the fundamental reasons people talk about don't have any impact on the market. Its all about liquidity.
My advice. Don't short unless its a hedge with a big stop. If you are up big, book some profit.
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So what if I'm wrong? There is always a possibility that we keep going up then have a sideways shallow dip. Generally, at this point I'm just waiting for a test of the 200 DMA to re-add. Even if thats above $11k. Say we got to $16k then pull back and hit the 200 DMA at $11500 many months from now. I'd rather buy that pullback than sit up here and watch a big red candle wipe me out.
To update this, I closed my longs because I've made so much profit I want to protect it. I have a hedge shot but its fairly small and balances my spot holdings more than anything.
I still think we are at risk of a bigger drop then a curved correction. It could start here, $11600, $12k, $13k, $15k. I'd be surprised to see it go much higher but in a mania phase its hard to call a top.
I do know that markets always correct. In a mania, you run out of buyers. Big money keeps pumping then lets the FOMO buyers take it higher. But you eventually run out of liquidity. Also, there is a TON of money to be made shorting a correction. This is part of the reason you are seeing these big moves probing for buyers. Markets just don't keep going straight up.
All the fundamental reasons people talk about don't have any impact on the market. Its all about liquidity.
My advice. Don't short unless its a hedge with a big stop. If you are up big, book some profit.
----
So what if I'm wrong? There is always a possibility that we keep going up then have a sideways shallow dip. Generally, at this point I'm just waiting for a test of the 200 DMA to re-add. Even if thats above $11k. Say we got to $16k then pull back and hit the 200 DMA at $11500 many months from now. I'd rather buy that pullback than sit up here and watch a big red candle wipe me out.
Comment:
I guess I better say that this is not financial advice, just something to consider if you are a trader and not sure what to do.
I mentioned that $10k was possible, but I didn't think it was likely. After the big move last night, the daily chart shows strength and I believe $10k is now more likely than lower prices. We reset the TD so there is a good chance we get another week of rising prices.
The big red candle was a reversal. The big green candle is a reversal of a reversal which are high probability moves, so if we close the day/week high today, the probability of higher prices increases quite substantially.
As long as we hold $7600 on a 4H close, I would consider this move to be extremely bullish. Its a strong reversal off the bullish 38% pullback of the last impulse and sets up $10k. I would have more confidence if we get follow through on monday.
I took a long ETHUSD trade and looking to add on dips and TP at $300.
I still believe that it is probable we get a ski slope pullback and I will still wait to make a larger swing trade, but I am trader and when a market reclaims a major level like this,I respect it.