CRInvestor
Short

Fail at bearish Gartley Pt. D suggests short

BITFINEX:BTCUSD   Bitcoin / Dollar
hello all,
Bitcoin's dead cat bounce off the key 4hr 38.2 Fib tag (582.37) has played itself out. If that low does indeed prove to be 'the low' that will bode well for BTC going forward ( bullish reversals off 38.2 tags are indicative of a strong market). Additionally, higher time frame analysis suggested we needed to work through a correction-time-window that ought to take us into this week and that has played out as anticipated. The question now is, do we break out of the current trading range in a massive bullish rally or take one more tank lower into higher time frame OTE             zones? The answer to that is still elusive at the moment but considering the Silk Road auction is looming it shouldn't surprise anyone to see breakout attempts fail ahead of that event.

So looking at the chart this morning (7AM pst) it was not surprising to see a short setup has developed over the past couple of days. Indeed, the counter trend rally off the 38.2 Fib has set up a very interesting bearish Gartley harmonic price pattern. I Tweeted last night that a fail at that level may set up a juicy short and now I see a double top has developed off that exact level. As confirmation of the idea, Willy himself is still quite ill and in the process of cleaning himself up and our raw momentum reading ( MACD histogram) has registered a double top at these levels too. While volume flow is still positive, I do see our latest big bar was red and OBV itself is teetering. Put it all together and it looks like we may need to test the lower end of our recent trading range before any move higher can begin in earnest.

So that brings us to the trade. I like the idea of shorting on fail of the last candle bar's low 602.34 with stops at new highs (just above 619.60) and a target of both the OTE             (Long) sweet spot 550.90 and the very noticeable gaps down to 553,23. This represents a little more than 3:1 potential reward to risk and a ratio I like. While there are no guarantees with setups (and my CME             buddies are more than content with 60% long term accuracy) this feels like a setup worth taking. Sadly, due to lack of funds, my account is unable to take the trade; but I sincerely hope those out there that can take the risk ought to seriously give this setup some consideration - or at least learn from it.

Cheers all and hope it helps

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new to trading btc, but not new to the world of fx. cheers for this.
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man, you are gonna luv BTC's harmonics....its a thing of beauty
+1 Reply
lukas.o.chudy CRInvestor
is there any harmonic pattern supporting your target placement? or you will adjust target later after some future action?
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CRInvestor PRO lukas.o.chudy
61.8 to 78.5 fibs is harmonics in itself
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lukas.o.chudy CRInvestor
hm one more question. why did you choose 522 as reference point for your FIB and not 540 low of the last swing (4h) ?
thanks
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btctrader99 lukas.o.chudy
522 was the low on Bitfinex.
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lukas.o.chudy btctrader99
i know :), but there was swing from 522 - 588 - 540
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Matderkater. btctrader99
Bitfinex charts are full of margin call and stop loss farming inspired erratic dips and spikes. It makes much more sense to use Bitstamp charts to give insight on where Bitcoin might be headed.
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CRInvestor PRO Matderkater.
We could get into a debate over which exchange to use (and there are lots of reasons to stay the heck away from Stamp atm) but simply put I will continue to use Finex levels. If you don't like my analysis there is no obligation to either follow me or read my posts...
+3 Reply
Matderkater. CRInvestor
A bit sensitive then CRinvestor? Yet I wasn't even talking to you.
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CRInvestor PRO Matderkater.
Sadly, am :(
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Matderkater. Matderkater.
But sticking with the issue. Bitfinex, Huobi etc can break out all they want. If Stamp doesn't follow, then Bitcoin stays put. If Stamp moves, they all move. Stamp is where the market is made.
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CRInvestor PRO Matderkater.
well my rebuttal is this, every exchange it seems to me goes through it's 'day in the sun'.Because BTC trading is an 'unregulated' market, I believe the public only sees half of what is really going on anyway. I have watched the community flutter between huobi, fnx, stamp and btc-e in the face of the Gox collapse. I have watched scandals (both potential and real) take the wind out of an exchange's sails in a heart beat - your beloved Stamp most recent case in point. I have seen governments try to strong-arm local exchanges and I know for certain a few of the other exchanges are black-market controlled. So with all that said, the simple point I would make is, these are unregulated markets - anything can and ought to be expected to happen at any given moment in time and there are no 'guaranteed' markets. Each exchange has its own nuances and quirks. Given one set of circumstances exchange A will lead, given another set exchange B will. It is interesting that I follow Finex because it is HK based and the news of late is of HK and Beijing coming to logger heads soon (so lots of potential trouble there)....in a nut shell this is total caveat emptor...
+1 Reply
lukas.o.chudy CRInvestor
great news.... great news. which case of stamp is on your mind?
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btctrader99 lukas.o.chudy
I'm not sure if this is what CRInvestor is talking about but recently, right after the super positive Expedia news came out, "whales" began to steadily dump thousands of BTC on Bitstamp, just forcing the price downwards from about 650. They just pounded it downwards and the other exchanges had to follow.

Then several hours later, the news came out about the US Marshal SR coin auction. So seems very, very possible that the dumps on Bitstamp were from insider trading, related to knowing the news about SR coin auction before the general public did.
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btctrader99 CRInvestor
Yes well said.
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lukas.o.chudy Matderkater.
Well, you would NOT get margin call (13%) even if you buy with max levrage (2,5) on 685 (high) and market drops to 522 (low). So .... no margin calls in the chart. Correct me if I am wrong.
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lukas.o.chudy lukas.o.chudy
also I dont think that the volume in the order book is big enough for stop farming and scalping.
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Matderkater. lukas.o.chudy
No. Only the most suicide traders will actually get margin called on BFX, but plenty will get squeezed. That drop to $522 for example, that pierced right through a long term support line since Jan 2013 that has been getting tested with increasing frequency of late. Stamp tested it at $538 and it held. BFX popped right through as though it didn't matter and then pinged right back up. Reason why BFX pinged right through it is due to leveraged stop losses being farmed. There are those who trade on that exchange with front running privileges who can front run market order a whole bunch of Ask/Bids right over a sufficiently crowded stop loss zone, forcing the stops to race further down the orderbook to cover themselves, at which point the front tun BTC purchases can be bought/sold back to them for say an average $10 mark up. Watch Bitfinex closely and you will see that their charts are punctuated by this sort of behaviour. Therefore in my view, I find that the Bitstamp charts (no leveraged trading on Stamp) are far more intelligible and serve as a much better guide for what Bitcoin is doing or is going to do. Bitfinex for me, offers too much noise generated by shark traders cutting into everyday traders purse strings.
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lukas.o.chudy Matderkater.
I will take closer look at this, thanks for explanation.
My experience was, that I was not able to trade BTC on finex (no alternative for me yet, because no short sells or margin trading on stamp) while watching stamp charts. To me it looks like, there are more "educated" traders on finex than on stamp. This may sounds ... funny, I know :)

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Matderkater. lukas.o.chudy
Go to the one minute charts of Bitfinex of a few days ago, where Bitfinex got from $600 - $608 - $600 within 20 seconds and then again $606 - $615 - $ 607 within a similar short time frame. There you will see a recent good example of what I am talking about. I had my eyes on the ball for this one because I had one of my short stop loss orders set at $600.11, which the exchange pushed right up to $608.13, which served as a split second top. This is why the highs and lows on BFX are normally higher and lower than those on Stamp. You probably have a point about the more educated traders being on the likes of BFX than on Stamp, as Stamp offers only very limited trading options. But from my experience, Stamp has the ultimate say on what Bitcoin does.
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lukas.o.chudy Matderkater.
:) so this is funny because i had exactly opposite experience. when i set target based on stamp it was never hit on bfinex, because market on finex was more ..... rational :)
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Matderkater. lukas.o.chudy
Yep, there is of course a strong argument that a trader should stick to following the chart of the exchange that he is actually trading on because that is what the majority of the other traders that he is playing with will be doing....self fulfilling prohpecy an all that. But think about it this way, As CRInvestor stresses, these are unregulated exchanges. In otherwords, they can pull all manner of stunts without necessarily even breaking the law. Out of all the big exchanges, Bitstamp is the only one that doesn't offer leveraged trading or even give the option of Stop Losses. This means that any exchange insiders of Bitstamp, are going to be limited in the ways in which they can slit their customers purses through gentle (or not so gentle) market trickery combined with inside knowledge. Bitstamp can't go farming stop losses or squeezing margin traders when they don't exist on their exchange.
Therefore, perhaps Bitstamp is going to be much more appealing to large scale investors in Bitcoin than any of the other exchanges which is perhaps why Bitstamp seems to be the whale's exchange, which in turn, is why it has the ultimate say on whether Bitcoin goes left, right, up or down?

If you are trading minor swings on Bitfinex, then probs best to stick to their charts, but for the bigger picture of what is going on, for me it is Bitstamp charts every day of the week.
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CRInvestor PRO Matderkater.
this is kind of weird and yet funny at the same time.....you guys are having a conversation literally inside my conversation....lol...social media ftw
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btctrader99 Matderkater.
I agree with this this Bitfinex is full of more irrational extremes on price movement. Because of this, I usually draw my trendlines on Bitstamp chart, even though apparently Bitfinex has the most volume of any exchange now. But certainly Bitfinex chart needs careful consideration too, but Bitstamp is probably slightly a more "accurate" reflection of the market.
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CRInvestor PRO lukas.o.chudy
522.15 is the swing low, hard to see on chart because Fib is drawn off it. As well, it was the panic dump low so that level (where the dump stopped) is vitally important...
+1 Reply
This was a good one and I actually understood about half of it. I'm still novice to intermediate with TA. What is OTE and OBV? Or were is a good site to read more about these and another key acronyms? I'm about to send you a donation and thanks for sharing these with us.
+1 Reply
CRInvestor PRO btctrader99
OTE: is a fib term (Optimal Trade Entry) and is the 61.8 to 78.6 retracement level. here is a tutorial I wrote on using Fibs: https://docs.google.com/presentation/d/1_FAf5ta95HlLndv6BLaW5wpp-8aDJEBEmqEAGFO40E4/edit?usp=sharing and here is a YouTube video I did on the tutorial info: :

OBV: is a volume indicator I use (On Balance Volume) and here a tutorial I wrote on using volume indicators: https://docs.google.com/presentation/d/1zyvKRo0nVXAHHSTKS9qKilgJVTwnC04i8p1uwqx-qG4/edit?usp=sharing and here is a YouTube video I did on the tutorial info: https://www.youtube.com/watch?v=0f9tXq7Gdo8&index=4&list=PLBQfICzKWV2K2MQOgeX9ssk69W1mgnxuW

cheers,

Brian
+4 Reply
primaindustria btctrader99
If you are new, then you have found the person whose material you need to be studying. Study and re-study all of Brian's material. It is a wealth of knowledge and it's all free! Also be sure to check out his YouTube channel. If you learn anything, which you should, you should really think about sending him some compensation in the form of BTC.
+2 Reply
CRInvestor PRO primaindustria
aww, now you are going to make me blush...teehee...ty sir
+1 Reply
btctrader99 primaindustria
Yes I am trying to learn more. I think i could really increase the winning % of my trades with a little more discipline and study. I am following CRInvestor now and already sent a donation and will be happy to send more in the future when I get even more value out of his posts.
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Your forecast played out very well!
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