Hello all,
On the heels of some dramatic price action of late, it is both encouraging and interesting to see the broader Bitcoin community come alive again with activity. Interest in learning Technical analysis is palatable and it really makes what I do fun. While I have considered myself a 'student-of-the-market' for more than 20 years, I have only been following BTC since December, 2013 and the past six months have been a very interesting tutorial on how bear cycles (or 'corrections') play themselves out. Considering Bitcoin's current and historical volatility, I suppose the quiet market of April/May was more the exception then the norm. With that volatility should come the understanding that price has/can/will move 10% or more within a very short period of time. A trade that moves against you (without rigid risk management strategies) can and will hurt a lot. Indeed, this is when analysts need to consider all possibilities given the current environment, only take setups that are within their plan and for heavens sake, always put yourself in a position to be able to fight another day. (shameless plug.....for help with this please refer to my online courses and tutorial materials),,,
So, with all this in mind I thought I would weigh in on two perfectly legitimate scenarios I could see play out over the coming sessions.
Bearish: Considering higher time frame bias (bearish daily) a continuation down into the $500 area isn't out of the question. Knowing the market never moves in a straight line one can us The BoT to trade their way down into that zone. Currently a bearish ab=cd setup is working. Shorts from 562.45 with initial stops (still working, missed 'stop to break-even level 536.91 by $5...ugh) at $588.01 are acceptable. Target currently is $485.81 and represents a 3:1 r/r.
Bullish: Considering the severity of the move down, one shouldn't be surprised at the idea of a 'dead-cat-bounce' back into resistance. Considering too, the recent completion of a bearish BoT setup, one has to wonder if going to the well one too many times is asking for too much. The initial test of the 38.2 Fib (579.39) and now the potential reversal here off the OTE (long) sweet spot (70.5% Fib or 541.39) has setup a bottoming zone. If a bottom was to form this is, imho, where it is going to happen. A bullish resolution through the zone sets up a rally back into the OTE (short) zone which just so happens to be right on a trend line and the 200 sma.
Personal conclusion: Considering higher time frame bias and the fact that this counter trend rally expectation would represent nothing more than a move back into an area institutions would consider selling into, my inclination is one would need to see more bullish technical evidence to support buying at current levels. We have the smatterings of a bottom, but that is all it is to me at this point. Should price action consolidate for a bit here that bullish case may gain some traction.
As a professional market technician, I must respect where we are on the chart and what the market is trying to tell me. I must be flexible in stance, consider all possibilities and put my expectations going forward into perspective. My greatest hope is you can use these levels and notes to help in your trade process and expectation too.
Cheers all and hope it helps
If my charts help you, or you use my indicators...
please consider a BTC donation to allow me to
continue my work :
1EBttA56cWsgtsZn83VGiNT8si7inZV5Z5
& follow me on Twitter @CRInvestor
On the heels of some dramatic price action of late, it is both encouraging and interesting to see the broader Bitcoin community come alive again with activity. Interest in learning Technical analysis is palatable and it really makes what I do fun. While I have considered myself a 'student-of-the-market' for more than 20 years, I have only been following BTC since December, 2013 and the past six months have been a very interesting tutorial on how bear cycles (or 'corrections') play themselves out. Considering Bitcoin's current and historical volatility, I suppose the quiet market of April/May was more the exception then the norm. With that volatility should come the understanding that price has/can/will move 10% or more within a very short period of time. A trade that moves against you (without rigid risk management strategies) can and will hurt a lot. Indeed, this is when analysts need to consider all possibilities given the current environment, only take setups that are within their plan and for heavens sake, always put yourself in a position to be able to fight another day. (shameless plug.....for help with this please refer to my online courses and tutorial materials),,,
So, with all this in mind I thought I would weigh in on two perfectly legitimate scenarios I could see play out over the coming sessions.
Bearish: Considering higher time frame bias (bearish daily) a continuation down into the $500 area isn't out of the question. Knowing the market never moves in a straight line one can us The BoT to trade their way down into that zone. Currently a bearish ab=cd setup is working. Shorts from 562.45 with initial stops (still working, missed 'stop to break-even level 536.91 by $5...ugh) at $588.01 are acceptable. Target currently is $485.81 and represents a 3:1 r/r.
Bullish: Considering the severity of the move down, one shouldn't be surprised at the idea of a 'dead-cat-bounce' back into resistance. Considering too, the recent completion of a bearish BoT setup, one has to wonder if going to the well one too many times is asking for too much. The initial test of the 38.2 Fib (579.39) and now the potential reversal here off the OTE (long) sweet spot (70.5% Fib or 541.39) has setup a bottoming zone. If a bottom was to form this is, imho, where it is going to happen. A bullish resolution through the zone sets up a rally back into the OTE (short) zone which just so happens to be right on a trend line and the 200 sma.
Personal conclusion: Considering higher time frame bias and the fact that this counter trend rally expectation would represent nothing more than a move back into an area institutions would consider selling into, my inclination is one would need to see more bullish technical evidence to support buying at current levels. We have the smatterings of a bottom, but that is all it is to me at this point. Should price action consolidate for a bit here that bullish case may gain some traction.
As a professional market technician, I must respect where we are on the chart and what the market is trying to tell me. I must be flexible in stance, consider all possibilities and put my expectations going forward into perspective. My greatest hope is you can use these levels and notes to help in your trade process and expectation too.
Cheers all and hope it helps
If my charts help you, or you use my indicators...
please consider a BTC donation to allow me to
continue my work :
1EBttA56cWsgtsZn83VGiNT8si7inZV5Z5
& follow me on Twitter @CRInvestor