What happens after the shorts massacre?

BITSTAMP:BTCUSD   Bitcoin / U.S. Dollar
Yes, they title is intentionally provocative and at the time of this writing it is not yet clear what happens, we have fallen a bit from recent tops, it is now around $518 on Bistamp and 3180 on Huobi. But I do think, that now that players controlling tens of thousands of btc             forced liquidation of almost 14 million worth of btc             long, they would go after the shorts. The shorts are now at around 6.3 thousand, down from slight above 8k, but some are ripe for harvesting, already deep in red as they were taken below $500. Not that much buying power should be required to margin call some of them and persuade many others to close voluntarily while they still can.

In the next couple of weeks, I see vigorous move up with few retraces. We maybe moving inside a triangle (shown above) then crucial crossroads will be around $560 and they will be more likely resolved up.

Disclaimers: 1) Arrows are completely arbitrary, to indicate usual zigzagging. In particular arrows in price and RSI do not match for that reasons.
2) This analysis is not based on any ( advanced             ) TA, but on intuition informed by trading experience
So iI understood that correctly, your reasoning is as follows: "It will go up because RSI is oversold and 'players controlling tens of thousands of btc' will go after short margin calls, all this based on intuition and experience." ?
Your chart is similar to mellymoo's forecast:

@Asterix - Quick comment if I may:

From mid-April to mid-August, your RSI has carved a lower-low against a background of higher high in price. This is a RARE occurrence referred to as a POSITIVE DIVERGENCE, which stands in shark contrast with bullish divergences. In such event, RSI is heralding a high-probability rallying in price.

While this remains a probability event of high degree, it does not mean that it will guarantee a rally. However, it holds quite a good reputation among RSI scholars.

In the intermediate-term (days-to-week), there is a good chance that it will succumb to bullish pressures, which do NOT always bring price up, contrary to common belief. In fact, it would simply take a large institutional orders to hit the BIDs at every possible levels, and thus causing two self-perpetrating events:

1 - Large institutional purchases at the BIDs will drill through all available retail orders, thus cleaning up all BIDs one level down at a time, printing a candle that moves down to where there are lesser and lesser sellers
2 - A successive move of purchases vacuuming all BIDs out of the way will also tend to trigger Stop-Losses, which are visible to all institutional and bank-level traders

The net result is a LONG positioning of institutions at ever decreasing price levels, which is tantamount to shaking weak-hands out of the way, as banks vacuum out the bottom of the barrel.

Whether this is what occurred remains to be seen, which is why a down move in price is not bearish per se, as long as this move occurs relative to prior price action. In your case, you are highlighting a rising trendline to demonstrate the possibility that all the recent price gyration has occurred in measured ways, which is what it seems to do at this point.

Looking at your RSI (a bit sensitized at 13), it will be a matter of whether it rises above the 50-line and remains off of the 30-line before such bullish scenario (i.e: banks cleaning out the bottom of the barrel).

Following is the DAILY chart I posted which illustrate the overhead resistance levels IF and ONCE price does decide to regain its buoyancy atop this blood pool.


David Alcindor
+2 Reply
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