MarcPMarkets

BTCUSD: Kicker Formation Begins New Movement Toward 10K?

BITFINEX:BTCUSD   Bitcoin / U.S. Dollar
BTCUSD update: Price jumped from the low of 7240 to 8717 in 48 hours which signals the possible beginning of the next broader bullish movement which can lead prices back to the 10K area. This market needs to prove it's new found strength by presenting a higher low formation.

In previous reports I wrote about the significance of the reversal zones, especially since they are overlapping a major support area . These zones (which are contained by the red horizontal lines) are areas where reversals are high probability. When this market was pushing the lows, I specifically mentioned not to react, and instead plan ahead. Planning ahead means recognizing the significance of these levels, and knowing how you will act IF the market provides evidence that our hypothesis is true.

That evidence came, first through the pin bar on this time frame, and then the follow through which is considered a "kicker" formation in candlestick terms. Even if you did not enter the market during this process, it should have been very clear to no longer be or think short. Now the questions is: Will this bullish momentum continue?

Price is retracing slightly which is a good thing because this is where it must prove that it is no longer weak. It can present this evidence in a number of scenarios that you should be prepared for (planning ahead). The first scenario is the shallow retrace which can unfold from the current candle in the form of a small pin bar , especially if this configuration happens to also qualify as an inside bar (which it is at the moment, but has 14 hours to go so it still has time to change). The second scenario is the regular higher low where price retests 7776 area and generates a reversal candle. The third scenario is the failed low where price retests 7401 or 6941 and reverses quickly. The third scenario is the one that shakes out weak longs and sucks in oblivious shorts. IF price does not reverse after retesting the extreme low, then there is a bigger underlying problem in this market.

Isn't the current swing high a lower high? And lower highs lead to lower lows? Yes to both questions but do not forget this has to be viewed in light of the context of the situation which carries more weight. The context is: This market is flirting with a major support zone , and just produced a significant price reversal formation. The fact that this reversal formation has appeared in a high probability area outweighs the structure of the previous short term trend (lower highs, lower lows). Knowing this is what allows you to anticipate and prepare, rather than react.

In summary, analysis and trading are two separate processes that traders and investors often confuse as the same. In analysis we are evaluating and comparing market information in order to estimate what this market is most likely to do next, not what we are going to do next. Once we have a better idea and can assign loose probabilities or weights, we can then figure out what we are willing to do: Buy, sell or nothing. There are 3 bullish scenarios that I outlined above that can appear. There is one bearish scenario which is simply a dramatic new low. It is now up to you to recognize which scenario the market decides to choose, and then execute your trading plan. That plan which should be prepared ahead of time should define everything you do from the triggers to enter, the time horizon, size and level of risk along with profit target expectations. And out of all these factors, time horizon is most important because it provides the foundation for how you define everything else.

Questions and comments welcome.
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Comments

@MarcPMarkets - Thanks for another good idea! What are your thoughts on upcoming death cross of 50 & 200 Day moving averages?
+2 Reply
Thx for sharing
+1 Reply
"Price jumped from the low of 7240 to 8717 in 48 hours which signals the possible beginning of the next broader bullish movement which can lead prices back to the 10K area. This market needs to prove it's new found strength by presenting a higher low formation", on which timeframe are you expecting to see a confirmed higher low? also what would be a clear sign change /indicator that we are going down to retest the 7776 k region? Thanks for this
+1 Reply
satertrading Asma7assan
@Asma7assan, MarcP is presenting and discussing a 1-day time frame. If you click on the little + in the upper left corner of the chart, the title will expand and you will see the timeframe is “1440”, the number of minutes in 1 day. For some reason, his charts express this in minutes, while others’ charts will say “1D” when referring to the timeframe.
+2 Reply
Asma7assan satertrading
@satertrading, Thanks for the clarification
Reply
satertrading Asma7assan
@Asma7assan, my pleasure. I have not seen MarcP reply to questions here (not sure why), so you may not get is answer to your retest question.
+1 Reply
Asma7assan satertrading
@satertrading, That's fine. I was wondering if any of you have seen the new green candle that was formed on the daily. what does that represent? two last green candles ...I dnt see the red candle that MarcP showed on his chart anymore.
Reply
satertrading Asma7assan
@Asma7assan, the red candle that shows up is what the market reflected at the time of his posting. If you run the chart animation by clicking on the circled blue triangle on the right hand edge of the chart, the chart should update to current market conditions (although this doesn’t always work on my iPad).
Reply
Jolgan satertrading
@satertrading, I´ve noticed that if the question is relevant, Marc will answer it in his next post, (whitout making refrence to the question), that's his style and is ok.
Reply
@Jolgan, good to know; thanks!!
+1 Reply
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