botje11

Bitcoin, Breakout and Retest of Support levels.

BITSTAMP:BTCUSD   Bitcoin / U.S. Dollar
We had a nice rally the past week up to around 6600 but the break out fell short on volume and conviction. I gave it a second chance when it looked like the breakout attempt was forming into a bull flag . But we could see alts slowly dropping a bit with a stable Bitcoin'. This was a sign for further correction down. I gave some warnings the past day or 2 for further drops after we broke that bull flag on the downside. But it was not easy to pinpoint where the drop was heading because the 6400/6370 was a big support level . In my last updates i showed a path of what i thought would be the most probable, that was a retest of the blue trend line . So far we have bounced up a little bit from this level, but still no bullish signs though.

What i said in my previous analysis:

What i think that can happen in a bullish version, meaning we break the 6500:

- We don't see a volume increase when the 6500 breaks and the price starts to slow down around the 6600 and follow the pattern as we can see on the right
- We see volume that is much higher than the monthly average, than we should see the bulls push it towards the triangle target around 6800/6850.


The first one is the what has happened, low volume breakout. This has given the bears more confidence again because the bulls have not shown any real strength and conviction. No doubt, this is a very bad sign. This is something kept looking at through the corner of my eyes, because we had a lot of of these failed and weak break out attempts the past few months. But as you know from my postings the past week, i had more confidence this time because the alts were showing real strength again, something we had not seen in almost 4/5 months now. Meaning Alts moving up while Bitcoin' was going sideways.

The bears have taken over again because we see drops happening without any real bounces up, this can mean 2 things:

1) Bulls are to weak and the bears are simply too strong
2) The bulls are waiting for better entry price (around 6300) before they are willing to buy again. In other words, 6300 could be a support zone .

So the bullish momentum is not over yet, because the bulls have at least one important thing in their favor. That is the higher low AND the higher high on the daily as we can see in the chart. That means the bulls need to defend the 6300 support zone because if that breaks, we have to assume the bears will attack the the 6200 low again from a weak ago. If that breaks, things can turn very badly. From the looks of it, that blue trend line on the left looks to be valid, because we had a retest earlier this week and with that bounce we made that rally towards the 6600. At the moment we are again testing this support line. That's why this is a very important moment for the market now. Don't need to see a big rally right away, but i do want to see the bulls push back a bit. Meaning i want to see some bounces up from the 6300 towards the 6400 the coming days.

So if we see the bulls push back a bit from the 6300+ level, there is still hope for the market to move up again. Otherwise the chances will be much bigger that we will just continue to drop . The past few months we have had failed breakouts on both sides, so trapping bulls AND bears. It could just be that we will continue in that trend. Meaning we could see a break of 6300 and 6200 and see a bear trap around 6100 or whatever level and just simply move again to repeat the same pattern as we have seen the past few months. This sideways movement has been a fear of mine lately, but with the alts showing some strength i gave it a chance that things were changing. But so far this attempt has (almost) failed. For more info read my previous analysis.

There is one problem as well at the moment and i think it's quite significant, that is the funding rate on Bitmex. It has been quite high lately with rates around 0.05/0.1%. A half year ago this was no problem at all because the market would make daily moves of 5% or more, with funding rates getting even much higher towards the 0.375%. But nowadays, these low funding rates have become a big problem. Because nowadays for the market to move up 100 points it can take several days. So if you have a funding rate of 0.1% and it takes 3 days to move up 100 points. It means that the funding costs are 3 x 3 times 0.1% = almost 1%. At the current price that is around 60 points only in funding costs. This creates selling pressure as well because people holding longs try to prevent paying the funding AND of course there are people who short it now because they want to collect this funding. Because now it is not only because of predicting the direction of the market, but the speed of the movement has become just as important. When having questions about this, welcome to PM me or post the question in the comment section.

Volume has been increasing a lot on Bitmex as well, could be because of the funding. If your a whale and try to do something here, this would be the ideal situation to lure in a lot of short positions, so they can get squeezed out of the market if they decide to push the market up at a certain point. That is what I would do if i had those funds :) Open intrest is not dropping on Bitmex, this shows that there are still buyers here. Now this is no information to trade on, because impossible to know for sure. It is just a thought, something to think about.



Please don't forget to like if you appreciate this :)


Previous analysis:

Comment: One of my last updates in my previous analysis. On the right we can see what the bulls need to show the coming days. Some bounces up and down, defending the 6300
Comment: Open shorts are still dropping, even though the bitcoin price dropped. This could mean there is money flowing away from the Bitfinex exchange. It has been having some issues lately, so it would be a logical explanation. Long increased but are dropping again. The open longs/shorts is normally not something to do TA on, but there have been TA patterns that have worked out this year, so it could be that the longs will increase again after the retest of that triangle. Not something to trade on, but it's good to know

Comment: We are clearly still missing that bounce i want to see towards the 6380/6400, to see that sign of life from the bulls. But at the moment it looks like the 6300 is holding as support. So the bulls still have a chance, but we need that move. If the 6300 breaks, it could mean big troubles

Comment: We finally have seen at least a move up this time. But no volume and was moving quite slow. So not the move i wanted to see but it is a start. I think we will keep moving inside the 6300/6400 this weekend. Nothing wrong with that, it would fit the picture.

Comment: Looks like a bearish wedge, so looks like it will drop towards the 6300 again, testing that support again. That would still fit the picture i described at the beginning. Going towards the 6380/6400 and testing the 6300 again. I wanted to see a faster move up, showing some strength. So the chances are bigger than i wanted for the 6300 to break. Just going to wait and see how it goes and then make a decision on the spot.

Comment: illustrating what i mean in the bullish version
Comment: As expected, a weekend with price moving between 6300/6400. The wedge broke but no fast move down as should happen with a wedge, just a slow (controlled) move down. Still think minimum is 6330 and max should be around 6300 for the bullish version.

So just wait and see.

Comment: Target is (almost) reached now of this wedge. On the left we can see a party of wedges going on :) and from the looks of it the current controlled drop seems to be moving inside a wedge as well. So we should be closing in on the on the low now.

If this wedge plays out, would fit my blue line from Friday perfectly. Showing another bounce up from the support zone.

Comment: Made a bearish break of that wedge, showing the quick drop. But so far it seems to have been a false breakout and are slightly above the wedge again. Need to get above the 6340ish to get things more neutral again and so my bottom formation from the chart on the right stays in play. You might think/say, the green support broke. It most certainly did, but as we all know, this market is all about false breakouts. That's why i mentioned the move ABOVE the 6340. That could make that drop a small bear trap

Comment: Tether is just still giving us a headache, it's just never ending!! Here we can see the 6340 level from USD exchanges has already been broken. But which one should we make our decisions on? I still looking at the USD exchanges.

Comment: Still have not been able to push above the 6340ish, was so close the past 2 hours. This is the chart for the new analysis, still writing it. We can see a possible bullish wedge (green lines).

For now, we could see a small drop to 6300ish again, but i want to see the price turn up their to form a higher low and THEN break the 6340. If we see that play out (staying above the 6300ish), we the bullish wedge will most probably be in play.

Comment: New Bitcoin analysis:

Comments

McAfee: Bitcoin (BTC) At $1 Million By 2020 Is “Conservative and here is why: https://ethereumworldnews.com/mcafee-bitcoin-btc-at-1-million-by-2020-is-conservative/
Reply
kardia crypto008
@crypto008, McAfee is full of himself. You will not see Bitcoin at $1 Million by 2020. I can say that with confidence.
+5 Reply
botje11 kardia
@kardia, I still hope one day they put him in jail for the rest of his life, he has destroyed so many life’s with his p&d schemes. I just can’t stand it, if you someone insults me you can’t get me to become angry, but people like him, don’t even want to say words
Reply
kardia botje11
@botje11, He has done more to harm this market than good, in my opinion. We need regulations in this market to put an end to this madness.
Reply
I think it is quite safe to assume that we're not going to see any big surprises in the coming weeks
Reply
kardia ReallyMe
@ReallyMe, That time has passed, and I already gave a reason why in another comment.
Reply
@botje11 can you tell me what is the meaning of fund rate? or simply give me a source or book to read? thank you
Reply
farzinsabbagh Chintalp1
@Chintalp1, thanks
Reply
botje11 farzinsabbagh
@farzinsabbagh, simply explained, if the Bitmex price moves ABOVE the mark price, longs pay the shorts and the other way around.

Mark price is the average price of bitstamp/kraken/coinbase.

When the price moves above or below it, shows a bit what the sentiment of the market is
Reply
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