When everyone was screaming with an expectation the market would just magically blow up again to $16k, the market was clearly running out of steam and a logical approach would have been shorting at the neckline with a tight stop at $12k. This would have provided great risk:reward yet nobody mentioned it. Unfortunately, I hadn't familiarized myself with selling BTCUSD pairs on Kraken so that wasn't even a consideration for me. But in retrospect, it seems so obvious and it would have been far more reasonable to short there than say $8700 or even $9800 when the market was already well on its way through the current move. If you look too hard for one thing to happen just because someone else says it will then you're going to completely miss countless other opportunities.
I can't even begin to list the number of opportunities I've missed because of questionable prognostication that's creating more fear than is warranted. I'll readily concede to being wrong, but my instinct has been to avoid following major TA "chart" people (on both web and tradingview) too closely and I can't even begin to tell you how frustrating it is to balance out fear of risk using objective methods while reading what appear to be overly simplistic interpretations of market price action that call for total annihilation in the market.
First, nobody is paying to the convergence of two major . This is reflected by the flattening of the 200 and the very slight downward slope of the 50 DMA as it converges into what appears to be the exact center of these two major . This is a big sign. This midpoint is $8871. That should be considered a reference price for the market moving forward as we get closer to some breakout or breakdown of the lower or a break back to test the upper around $10k to $10.5k. A break above or below these will be significant, but it seems overly simplistic to think just oh we broke $8700, now $6000 is coming. That might leave you wondering what the hell is happening when the market is moving back towards $8871 or creeping along the lower rather than taking a nosedive to $6k. While the $6k scenario can still happen I'm not convinced that it will based on basic understanding of the underlying market.
On the current downward move the market nearly perfectly bounced off the lower from March 2017 for both Litecoin and BTC . Clearly, there is awareness in this market of this price level.
Also, when the previous dip to $6k was hit the previous high was nearly $20k. That move from $20k to $6k eradicated MANY weak hands. That was a 70% draw down. On the current move we've only moved from $11800 to maybe $7.7k, or 35%, with a move back to test $9.8k in the middle. There aren't nearly as many weak hands ready to capitulate at this point when considering that price is only 20% below the midpoint of the ATH . Also, trading was well over 70% higher on the last dip. has decreased considerably, which again suggests that there are fewer market participants at this point who have entered based on pure speculation (i.e. FOMO) rather than some sense of strategy or belief in the technology.
Google Search trends also reflect a bottoming. Projections for this week are about 10% less than the last two weeks which were the same. This is significantly less than the 25-50% dips that had been seen prior to the last two weeks. Tom Lee is calling the bottom on the Bitcoin Misery Index ( BMI ) and an ex-CFTC chair doesn't think enough institutional capital is in the game for this to be anywhere near a "bubble".
If price goes to $6k you can imagine the bounce will be violent and fast which makes it even less likely to happen.
We could see another dip back towards $7.5k which would be about 9% lower than the current price of $8180. And should this not be supported, then that would be really bad, but given the conditions I've described, I think too many people will see an opportunity at that price level for there not to be a strong enough bounce to keep the trend alive.
The bounce off $7.7k was hard and fast and those who used indicators to enter there would have been rewarded. All this talk of $6k made me incredibly indecisive to the point where I almost need to tune out completely when I'm trading.
The reason XMR hit $200 is mainly because BTC is driving alt price action. ETCUSD has been oversold like crazy yet it's still falling off a cliff every time BTC takes a big dive. LTC appears to have its own price action but it's still mostly correlated.
The bear flag definitely seems like it could have been driven by fundamental sentiment shift such as Tom Lee's BMI news spreading as well as the ex-CFTC chair saying that Bitcoin wasn't a bubble. Clearly that wasn't enough to send the market back towards the downward trendline but that kind of price action can be driven by RSI strategies as well as moving average positions which happened to be right where the bear flag sat, in between the 50 DMA and the 200 EMA.
Then I saw this crazy order book and I just decided screw it and bailed just like that and of course screwed up yet another trade by first doing something I hadn't planned and then reversing out of it in a way that didn't make any sense either.
Sometimes you just have to walk away and do something else for a while, especially when you're tired.
However, it seems like this kind of news:
could be the sort of thing that freaks people out and that's the systemic risk in the market that I've discussed.
How much of the market is being propped up by bad actors? We really don't know until we clean it up. And if there's one thing that will send crypto back to $3k-$4k it would be major regulatory shocks such as the one described above.
When you've identified clearly favorable parameters for entering a trade then you shouldn't worry too much. At the current price level with the current price action with tight support and resistance the market could breakdown or breakout at any moment but you're better off waiting to see which direction it goes rather than wait to see whether you end up stuck in the wrong position when that happens.
Moving sideways out of this channel could open up sell pressure for a move back towards $8700.
With another trade that should've worked out better I ended up doing 1.6% in maybe 30 minutes total of holding a position. So not bad...
That being said, BTC and LTC face similarly bearish resistance levels ahead so better not to go too long in this market until we're clear of this bear flag.
Order books would suggest trading will stick to a range of about $7750 to $8250. This pattern similar to last weekend where a short term double bottom led to a bigger reversal.
Medium duration RSIs seem to indicate a move lower in the 1-8 hour timeframe. This would coincide nicely with a bottom around $7700-$7800 which would happen to be an intersection with the upper trendline of the descending channel around 8 AM - 12 PM EST.
On the 1 day RSI we're not likely to see convergence unless we get a lower low, which would be less than the previous low of ~$5900 so I don't expect a move like this to happen so quickly.
On the 4 hr RSI the chart is strongly suggesting convergence with MACD also suggesting it as well. If RSI turns around sharply upward that could be a strong buy entry for a shorter duration trade.
If we consider this pattern a huge symmetrical triangle, we are now on the 4th touch and we should consider whether a breakout will happen to the downside. Should price start moving swiftly below $7500 then a sell order should be considered. Currently, just looking at the order books, there is MASSIVE support below $7500 so this remains a risky option.
Given that the symmetrical triangle came off of an ascending trend the typical move will be a continuation of that previous trend. This would be consistent with the idea that RSI convergence is signaling a bottom.
Then, in a completely hypothetical scenario, if we get a move back to $8500 in the next day or so followed by a move back to $7800 that would be a really strong sign that the we've bottomed as it would be an inverse H&S with 2 touches off the March 2017 trendline. That's more of an imaginary possibility but if a sharp move above $7.7k through $8k occurs then this would be a highly plausible scenario given the very thin order book up to $8.5k. This is a scenario that should be watched based on RSI signals.
A big momentum move to the downside seems highly unlikely given that overall volume is low and declining and it's Saturday going into the middle of the night in the US and Sunday morning in Asia so volume likely won't be high enough to break this huge support between $7500 and $7600.
MACD and RSI Convergence has continued to be strong on the 4 hr chart over the last 10 days and this megaphone pattern has now touched for a 7th time off the bottom.
In some ways a consolidation back to BTC could be fundamentally better for the network in the short term though there are still a lot of mixed signals being set especially since scaling is still not resolved.
This is slightly up from what had been showing as 20,20, 18. This would be a positive sign that Bitcoin is hitting a bottom. An increase here would be a favorable sign. Overall, crypto is still in a bearish trend so it's too early to tell but the overall regulatory landscape seems positive in that blockchain and crypto are both being seen as innovations that should be cultivated rather than stifled.
Congress dubbed 2017 "the year of Cryptocurrencies" in a 2017 Joint Economic Report. It seems premature to declare crypto in a bear market when the overall equity markets are still showing a fairly strong risk appetite.
This cool article really emphasizes the power of public blockchains, even if this particular application doesn't necessarily influence coin prices:
Given the short duration nature of this new trend (from March 16) the pull of the larger trendline combined with a continued strong indication of RSI and MACD convergence would suggest that the market is close to being oversold despite a significant amount of resistance ahead.
If the target is $6k, then that's only 18.9% gain compared to a move back to $8800, which would also be 18.9%. At 1:1 it doesn't make sense to bet on it.
Given that overall market signals (BMI, Google Search, confirmed transactions, 4 hr MACD/RSI Convergence) suggest a bottoming, it seems more likely that in an absence of negative market shocks we should be seeing an intermediate duration recovery from somewhere between $6k and $8k. It could be that on a 1 day scale we're not at the bottom yet but it seems premature to call a straight shot to $6k.
The optimal short would have been off of the previous bear flag at $9.8k or off the inverse H&S neckline around $11.7k. At $7.4k the risk reward has become unacceptably poor.
If that's the expectation then reward:risk improves to 46% vs. 18.9% or about 2.43:1.
Given that they supposedly have billions of dollars to influence the market one would expect some kind of "market intervention" here at this critical price level. Then again, maybe that's asking too much.
Should the market pull back into the trendline during this timeframe this could be a short opportunity with a tight stop given the current expectations. If the price is well off from the trendline then I would wait for a momentum break out lower.
We'll wait a few hours and see what happens.
The negative descending channel started at the ATH shows a current top of $10600 and a bottom of $4600. That puts the midpoint around $7600, which explains why the market has been moving through this price level quite slowly.
Also, the March 2017 trendline is providing strong support against several bear flags and the downward slope of the 50 DMA.
Since BTC essentially serves as the backstop to the entire crypto market, it makes sense that money is rapidly flowing out of altcoins and back into BTC. If altcoins have any chance of a reversal they need to consolidate their strength in BTC.
I'm not sure if I noted something about ETH but it was very noticeably oversold and I figured if BTC broke out then ETH would have an even better move and with BTC moving 13.5%, ETH moved 17.6%. LTC did about the same as BTC from its low.
This move could have had something to do with shorts getting closed out as well.
It would be best to look for an RSI Divergence once the $8500-$8600 range is achieved to help confirm the likelihood of a dip back to $7750-$7800 to form the right shoulder.
This is an extreme hypothetical so it could turn out to be nothing but it seems a $100-$125 risk would be worth a $700-$800 reward. Reward:risk of 5.6:1.
$8600 appears to be the head & shoulders neckline so capturing profit on a move down would mitigate much of the risk in buying back in at the $7700-$7800 level and allow for a slightly more generous stop.
Should the move down off the trendline fail to materialize or should a sharp move happen above the trendline then this opens up a move to about $9k. A break above $9k would open up $9.5k or what appears to be a trendline formed between the February low and last weekend's bear flag.
A move above $9.5k starts to run into a lot of resistance between $9.8k and $10k which is right around the main descending trendline off the ATH (aka the upper channel line).
All this being said if we are in a huge symmetrical triangle then the predicted direction to breakout of the triangle is up as a continuation of the previous bullish trend.
So in the absence of any other major influence on price we'll probably continue to see a creep up but I'll likely just wait and see since the market seems desperately overbought at this point in time. Probably not a bad time for intraday trading.
My biggest confirmation bias is expecting another huge move right after a huge move when normally the market takes a few days to settle down and consolidate. Given the lack of a clear pattern at this point it seems like we could be going sideways for a few days, and based on current support, perhaps we'll see a move back to $7.9k, which would be consistent with a possible inverse H&S. This would line up with a move on Friday March 23 and a bounce off the March 2017 major trendline, possibly in the evening USA time, which would be consistent with how major price action has been playing out lately. This is completely hypothetical and more fantasy than prediction.
One of the biggest problems with following a 24/7 market is mental fatigue. Especially if you're taking time out for family and other healthy things and miss an opportunity. But this is a good lesson in planning written strategies for when you're not able to think clearly. I should've already thought about what I would do if the market started moving while I was out. Half the time I'm skiing I'm carrying an iPad Pro so that I can trade but you can't really enjoy the time you spend "not working" if you're still trying to work.
That being said, I've missed quite a few big opportunities the past few weeks and I have confidence the market is not quite ready to settle down into any particular trend especially if this big sym triangle is playing out as I've been suggesting. A bullish move above the downward trendline will take the market back to FOMO price levels.
That being said, if there's some other trigger timed with a move back to the ascending March 2017 trendline then that would be very bad timing and could trigger a panic back to below $6k.
At around $8500 we're still below the 50 DMA so a slow creep towards $9k, which is about where the 50 DMA seems like a reasonable trend.
Almost as soon as I said that the price fell from $8540 to $8415 in two seconds.
Guess I should've kept my short...
*the timing of my call was off by about 1 hour
*I probably should have set a broader stop, like $8650, which would have been my original stop if I had been patient enough to wait for $8600 in case we saw a false positive
*Ultimately, I let impulsive thinking push me into a position that was slightly off and being slightly off threw off the risk management enough to force me out before seeing any big risk.
Was going to say that:
1) reward:risk not so great now for a short at $8400 so better to wait for a move back to the trendline and a combination of some indicators before trying again
2) It seems likely we'll get sideways price action for a bit though order books look pretty thin in the ASK so I still wouldn't be surprised to see an overall creep towards $9k. Getting past the trendline will be key.
3) 15 min 50 MA and 15 min ADX suggests this positive trend is running out of steam so we could see sideways price action between this 50 MA (15 min chart) and the trendline as the 50 MA flattens out.
I have to go and bang my head against the wall for screwing up yet another winning trade...
At this stage it would be worth considering some alts off this dip as we might see some sideways price action that could see some good intraday opportunities. In general, XMR and ETC have been trading with decent volume and generally look oversold.
After these somewhat predictable moves off of 15 min RSI you usually get a calm period where you can make some money trading 1 min RSI moves since price action typically tends to go sideways.
Of course, this is usually poor risk:reward since you end up holding the bag if the price action doesn't hold up for a long enough period.
I wonder if there's any data showing whether this strategy works...
Usually if I go into trading 1 min RSI I end up taking about 1/4 the position size I would normally trade with on expectations of a bigger trend.
At this price the downside risk of going to $7.7k isn't really worth the short term upside of hitting $9k. This is about a 1:1 risk:reward trade.
Since the 4 hour candle closes in about an hour, there could be a lot of price action around the 1 hr and 2 hr candle closes depending on price action. I could see a big move happening before or after one of these candles close depending on whether the price fails to get back to the trendline.
Price action has really broken out above $8400 so that seems to suggest on 1-45 min charts that this lower channel is holding up. For now.
A market buy for 11.9 BTC ... 4 hr candle closes in 20 minutes. We'll see if anything happens. Seems like the market is just stuck in the middle of this price action right now.... Probably best to go take a break...
On a side note, Pantera Capital just published a thoughtful piece on crypto and whether or not we're talking about Pets.com . A very smart piece.
In light of the idea behind IBM's DLT tech cryptocurrencies seem EVEN more viable and relevant since enterprise adoption of crypto promotes a completely different agenda than that of public blockchain. Public blockchain is about freedom and creating systems that can't be readily dismembered by some centralized body even with a coordinated attack. That being said, we're still at a stage where the system could be broken rather easily due to design flaws.
Since I was already holding a few bags on XMR And ETC I've been reluctant to take more risk than I need to though I made other mistakes with those two positions.
If I had set lower stops then I would be limiting my losses but not creating a scenario where I could completely miss the breakout that I had been anticipating for 4 days. It's like I did all the work and then overreacted right at the end.
In general, without a clear exit strategy to manage risk I just winged it thinking I would still be able to catch the breakout later with less risk. Having a stop would have been a much clearer risk management strategy with clearly defined risk:reward.
This doesn't seem like a coincidence but the way this pattern is unfolding is ridiculous...
So if we don't see a dip lower and just a slow creep towards $8900 or a breakout above this trendline then that would make sense too though a move back to this trendline with an inverse H&S formation would make the reversal much stronger.
Also, based on the 1 D chart the possible inverse H&S doesn't looks so promising. It's sloped kind of weird and the timing doesn't seem to line up.
It would seem more natural for this current trendline to continue pulling price towards the intersection with the descending upper channel trendline that hits the midpoint of our sym triangle. It might be worth going long on about a 1/2 to 1/4 size position from normal given the overall 1 D perspective.
It seems that 1 D and 4 hr charts are at odds with there seeming to be a relatively good chance that we'll see a bigger dip in the next day or so. 1 D hasn't signaled a bottom so that's a big concern since RSI convergence would suggest a move to below $6k. Since we're just sitting in the middle of this range I'd rather just wait.
I associated the neckline of a potential iH&S at $8600 and that happened to be around where this ascending trendline was hitting a lot of resistance.
I did get close with the timing but overall that trade probably still makes sense given the size of this channel between $8600 and $8250 and the overall risk:reward.
Even Bloomberg talks about BTC prices now! That would have been unimaginable last April. That crypto is becoming "normal" is a good thing and hopefully the tech will catch up a bit with the hype.
That being said, Bitmain is a BCH shill so if they're so dumb that they can't understand that BTC drives everything in this market then maybe they really are that stupid.