If you ever grew up traveling by train, you will know the feeling. You fall asleep, wait for the station to be called, and you wake up at the terminal station. Been there, done that back in a Parisian subway.
When I defined the targets (and for those having followed my dead-on hits should know that we go way (up) back, it has been a ride. In the more recent analyses and forecasts, I defined a bottom value as low-probability, namely: 384.65. Well, wake up lonely passenger, because as far as my predictive analysis went, this was supposed to be the least probable level of reversal (highest was defined @ 425.37, but bears kept banging holes in the bottom of the honey barrel, sinking the cryptos to ever so cryptic levels.
As I write this, price has recoiled a bit, and I would need a bit more time and data to analyze the strength of current bears versus the potential of a rally from this level. However, without altering the original analysis, this was expected to be a "bottom barrel" level from which to expect a rallying in price.
Hence, for the time being, I will move the indicator from SHORT to NEUTRAL, while price unwinds. Whether a relief rally occurs, or a true and honest departure to the topside burgeons from here has yet to be defined. Let's price unwind and keep the original forecast in mind.
Predictive analysis & Forecasting
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... Oh! ... Hi, Friends!
No, contrary to opinion, I have not fell into a slumber (quick let's re-adjust my hair and erase the bedsheet marks off my face - Hmmm ... )
Looking at the chart, we can assume that the title "Bitcoin Bears Bang Bottom Barrel ..." was appropriate, as indeed the bears did scrap the bottom of the barrel and there was only one direction to go ... Up, that is.
I have yet to put a final touch on a new chart then let the paint dry a little (I really want to wait for a solid directional confirmation signal, before I post the chart. No, really), but I will add a few comment herein as a way to recapitulate the recent price action.
First, let's review a few recent calls:
- Following a series of low to moderate to high probability support definition, the predictive analysis ended up sandwiching a high probability support target @ 425.37 with two moderate levels, one above @ 438.82 and one below @ 408.87. A low-probability defined the bottom of the barrel @ 384.65.
Second: What just happened ... : In the space of two 4-hour candles, bears clawed through the lowest target to leave scrap marks @ 339.79. However, they were just as quickly pushed back and revisited the 541.00 level, which was left in the chart, anticipating a support-turned-resistance precious moment.
In the context of the momental lines, which were lined up into parallel to define channels, this 541.00 high was also justified by the validation of a top-most bearish trending momental line - Following is a link that will give you a glimpse of the upcoming chart. Herein, you will see what that channel looks like:
BTCUSD (Bitstamp) - Chart released on 16 APR 2014 @ 0946am CST; Price @ 522.04
- So, now what?
The price is expected to unwind to the downside and find significant support from which to escalate to new highs. The prospective bull should remain put, while the bear might consider taking time to pull the ursine vest off. The early predictive analysis and forecasting is cautiously optimistic, as the market has produce an early bullish market reversal, pending confirmation.
Significant structures to consider are as follows:
- Bearish Structures/Supports:
@438.97 - This offers the first and highest probability of reversal
@384.35 should concern aspiring bulls
@363.53, if BBCB'ed should prompt bears to done that skin back on.
---> All of the above levels are temporary, but represent LOWER probability projection plan compared to the prospective bullish projections that follow. This is to remain true UNTIL a trend reversal confirmation signal or a complete invalidation signal occurs, which ever comes first would cancel the other.
- Bullish Structures/Resistance
Bulls should adjust their hopes and aspiration to fit a demanding uphill battle field. Residual bears have dugged significant trenches overhead. However, first and foremost: the upper border of the channel, defined in the chart above, has to be overcome. If and once that bloodied mud battle is cleaned off, the following resistance will likely keep certain bulls in doubt:
@541.00 - This level will feel like a deja-vu. Bulls that have left some skin there will likely hope to reach that level and relinquish any chance of re-experiencing the pain of loss. So, prepare for some selling activity at this level
@630.00 - This is a predictive analysis/forecasting product, but it falls quite well in line with the E.A.G.L.E. range, so I will simply say that bulls should expect a significant slippery pull-back at:
@630.78 and @667.80 ,both of which are loosely defined as a probable departure point to the downside, and remains to be evaluated as to how far down is price likely to roll. I would venture to say that a 38.2, 50.0 or 61.8-Fib retracement might offer a reliable measure. However, I would need to turn to my system to gauge the probable depth of reversal.
---> All of the above levels are temporary, but represent a higher probability projection plan compared to the prospective bearish projections defined above. This is to remain true UNTIL a trend reversal confirmation signal or a complete invalidation signal occurs, and as above, one occurrence would cancel the other proposition.
The directional should read "Neutral" and the stage lights off until bulls and bears trigger a committed directional signal. Until then, it's all prose, words and wind, none of which has the power to move the market, unless your mom calls you Mrs.Yellen.
Predictive Analysis & Forecasting
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Thanks for taking the time to put this all together. Fantastic stuff.
My humble TA knowledge (MACD, RSI, etc.) tell to buy, but then where is the supposed buying volume from smart institutional investors that should have jumped into this 'opportunity'.
So, I bought a bit and am sitting ducks still with my other fiat dollares. For weeks I thought that around 400 will be the low but suddenly 260ish became a possibility.
I should say that students of the markets are all too often inculcated by the force of idea that institutional knowledge is all powerful and all knowing, but more often than not, institutions are made up of clusters of same-minded thinkers all deluding themselves over an adopted idea.
This is nothing more of a real life example as the financial institutions that keep on getting it wrong, cook the books and recycle their lives from one scandal to another.
The real matter of things is that we tend to believe that one successful start is due to some innate power one has over others in one's ability to see things, perceive or sense, which others can't. And this is this very belief that makes graduate of Ivy league schools join and replace the chairs of retiring Ivy league graduates, and thus perpetuating the inner-circle belief that they have some superior knowledge about the market.
What is true is that a lot of the Yale graduates have ended up in the leading, world-shaping banks of US origin and of international control. For instance, ALL of the recent secretaries of finance have come from Yale. In fact, President Obama was once a lawyer for one of these banks, and by ascension to key political positions, they simply pull one another into the various controlling branches of the government - In case you are interested in all this, here is a cool link: http://www.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405
I say all this because there is nothing more powerful than standing in front of a body of knowledge, embodied into a large financial institution and branded by a fancy name and shiny logo, and gasp at the realization that you too could be a trader at the side of these gigantic financial machines.
Truth is, if you trade the Forex market, you should know that there are parallel worlds, if you'd allow me the analogy, where on one side, the international banks are trading the largest market ever created between themselves, and on the other side, a smaller pool of synchronized trades exit, marching at the RELATIVE but NOT real pace as those of the banks. What I am talking about here is the fact that instutional banks will NOT allow you to open an account and trade on the real Forex market (unless you are a large investor, corporation or country), but would instead allow you to trade "next door" in a smaller pool for what is referred to as retail traders.
Retail traders tend to by under-capitalized relative to institutional traders. What's more, retail traders tend to trade using smaller timeframes, say, M5, M15, may be up to H4. In contrast, institutional traders would trade may be as small as H1, but would typically place large institutional order of such a magnitude that it has to be infused over several days, hence, expect these traders to dwell at the H4, daily or weekly timeframes.
Now, why this discussion? Simply because institutional traders are equipped to see ALL of your orders, and this means ALL of yours entries, stop-losses, take-profits.
What's more, they are often the same institutions that offer you to open an account, and ever-so-kindly teach you about simple patterns, may be even advanced patterns plus Fibs, and some fanciful indicator (typically MACD, RSI and Stochs).
What is happening in fact is that they are teaching YOU, the retail trader how to position yourself into their line of fire, so that they can cluster all of the same like-thinkers and swipe you out of the way. What YOU think was a broad market swipe that took your position out of the way was simply a "stop-loss hunt" by the very institutions that need you to feed the profits on that side of the world, while they process orders on the institutional side of things where they have little to no control of the news.
For instance, say that the Fed decides to taper, as it did. It means that the Fed decided to decrease the amount of US Dollar it infuses into the cash market, so that less cash, more value, and the USD rises. Say that the news is due in the morning. Also, let's assume that you know ahead of time that the Fed decision will be to taper, and that it will naturally push the USD higher.
First, watch a common price action, which is that of institutional traders starting to pull price to as low a level as possible, so as to free-load off of stop-losses which they can see, count and estimate. This free-loading allows them to take position at a discount, assuming the calculated risk that the decision will be to push the USD higher.
When the morning news releases the taper info, it takes the USD higher and price moves at seemingly wilder swing ranges. I say seemingly, because my predictive analysis and forecasting has been able to predict tip-top and bottom-tip reversals, and lay out targets way ahead of time within a price field that has yet to be filled (I have multiple examples of this you are welcome to look into my older Facebook site: www.4xQuad.com, or simply ask for some examples or see some recent calls I made in ANY asset).
My point is that price is constantly controlled, and that the retail trader looks at ranges (M5, M15, H1, H4) where price is allowed to go AGAINST the larger institutional moves in ways that really does not matter, because at the end of that hour, day or week, price will be allowed to "join" in with the institutional price action, as if the two had never been separate.
This is an important concept, because it goes at the core of assumption, which is that trading by price first, or price only puts you in harms way relative to the institutional traders that have the ability to lead you astray. For instance, I tell the junior trader to remove all patterns off of the price field (i.e.: removing any Gartley, Bat, ... etc, so as to not allow your mind's eyes to get locked into a price action expectation).
Instead, I recommend the trader to look into non-price patterns. For instance, look at what RSI, MACD, Stochastics, or any other indicator does at specific price levels, and see that it does an action that is repeatable across days , assets and timeframes.
For instance, the biggest reaction I get, which is one that goes at the core of belief of any and all institutionally breast-fed traders (and here, I am talking about "leisure" as well as professional traders), the RSI is taught the wrong way.
Say what? You might say. For instance, if I told you that a bearish divergence is NOT an indication of a price that is about to fall, but instead indicates a bullish trend continuation, or that vice versa: a bullish divergence is NOT an indication that price is about to rise, but instead indicates a bearish trend continuation, I suspect that you'd think that I was crazy and utterly stupid.
Now, hear this: This rule is NOT mine, but instead that of the author off RSI himself, Mr. Welles Wilder.
Now, going back at that book about ancient knowledge and what not. What if I told you that Mr. Welles Wilder did in fact turned his back on the RSI logic, and instead turned to planetary motions to predict the market. Would you believe that I am even more crazy than pronouncing the RSI rule as non-sensical, as I just did?
Well, simply look up his site about his society, which was founded in the 1980's, shortly after he publicly released his RSI findings:
In any case, what I am trying to send across here is a message that should keep you thinking, not in the ways that institutional houses need you to think, as they doll you into their slaughter houses, but as an indivisible individualized thinking person, who challenges all that is, including current thinking trends about the markets, price action and price itself, as well as every and anything you just read about.
It all starts by sitting still and watching.
When I studied naval architecture, we had our tools and mathematics to work on curves of a ship design. But then in the end it always boiled down to looking at the curves with intuition to decide what to make of them. The computer or model couldn't do it. Similar here.
Rigged markets: For quite some time I thought that the Bitcoin/Cryptocurrency markets were more transparent and closer to being free markets than the established Forex, commodity or stock markets. Not anymore. They Seem to be an ideal playing ground for pros with a large mass of naive newcomers feeding their appetite. A lot of fuzzy idealism and greed mix together.
Was not aware of these dual pools in Forex. Makes sense to some degree - at least from the perspective of the Powers that Be.