This is a follow-up to previous W analysis, dating back to June 18th (last low day). I posted plenty of updates there and there's not much i feel to add, except that we almost reached the FIRST decision point.
As i wrote previously, in my opinion Bitcoin has two possible routes up: either from above or from below the June low (general area).
In order to fulfil the former option it should -ideally- play a double bottom scenario, roughly as represented on the above chart (Adam/eve bottom). It boils down to confirming that falling wedge by keeping afloat of support and piercing up 20,1k + MA20/W (now at 22,5k).
RSI vs Stoch RSI is not ideal, but it has a chance it and overall R:R is decent. First target mid-20s, second mid-30s (to be re-evaluated). Intraweek wicks, both ways, wouldn't matter. Eyes on W close and on volume.
The above scenario would be my preferred option. Failing that, the lower route chances would increase. Yet no hurry, let's focus on the former option for now.
"Prettified" weekly chart:
Same scenario as seen on Monthly, about 2 weeks ago:
As always, DYOR and measure your risk. Have a stop.
Previous analysis:
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Up about 600$ and testing resistance. Match is starting, we'll measure the outcome on W close.
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Good, but we still can't rule out a rejection.
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To be evaluated on W close. Long way to go.
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Still sideways within a 12% range, see box. Pretty unremarkable and boring price action.
Breakout of that range will be telling. For now we have a pullback to previous resistance, an inner wedge and a bullish divergence ongoing. Stoch RSI looks close to bottoming, while DXY seems about to stall.
No hurry, let's see ...
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Some W MAs painted on M, for a both-TF synthetic view.
Key is MA20/W (red) falling and creating a wedge-like scenario. Black is MA200/W, just for reference.
The way the lower BB expands more than the upper one usually implies a bullish bias. That said M is a huge TF and intra-month wicks cannot be excluded.
All in all the above chart says we are getting very close to the first decision point, so watch out for range breakout and look for a confirmation in volume.
Get ready for high volatility, which is likely to span (possibilye) from second half of october to whole november.
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Last time i saw such a scenario was inmarch 2019. Let's see whether Bitcoin is going to rhyme this time ...
EDIT: typo above, black is actually MA300/W
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Zooming a bit:
No comment needed.
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Zooming:
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No volume. Patience, expect a big move.
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No doubt we sit on the edge of a strong move
That's likely to start on Binance. Look at that volume, pretty different from other exchanges.
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Any sideways movements come to an end and this won't be an exception. It won't take long before we get back (huge) volatility.
Price broke out of congestion and is in route towards MA20/W area (20,5-21k) where it should find resistance.
MA20/W is THE key resistance and it may end with a squeeze or a strong rejection. Likely after a few attempts.
For the current movement to be meaningful MA20/W should be pierced on a weekly close and confirmed on the following week, possibly with good volume.
No hurry, let's see and wait for a confirmation of the scenario.
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Moreover, RSI didn't breakout yet:
Watch it.
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Let's sum it up, on W:
You get why MA20/W is key.
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Watch RSI/W.
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Test of MA20/W clearly ongoing.
The outcome of the "upper route" described here depends on the breakout of such MA, with a further confirmation on weekly close on at least 2 consecutive weeks.
A strong rejection would be cumbersome and may invalidate the scenario. So this is a crossroad.
Be aware of risks: better to have a stop, as usual, for a comfortable ride.
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Let me tell it straight: it's crucial to confirm the below attempt of RSI/W breakout on tomorrow close.
A failure would likely mean a sudden slump. Which would come at a noticeable cost in term of price and time.
Watch it.
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RSI breakout not confirmed, still at resistance and beginning to show slight bearich divergences on D. Time to use some caution, be sure to have a TP placed.
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See MA20/W acting as resistance.
Failing such test would imply revisiting 19,6k. First place. That's the reason i suggest using some caution here.
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Comment: Further test ongoing. Not much time left, it's either breakout or rejection within few days imho. All depends on volume.
Watch it.
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Confluence pretty close to MA20/W.
That's the calm before the storm. Volatilty ahead, likely both ways.
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Both ways, indeed ...
Let's have the dust settle.
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Ok, here we go. Here things will get really messy.
The below chart is merely illustrative of the broad scenario, in order to let me explain better my view.
As you notice we have some small (candidate) bullish flag, which may play out for some time. Bulls need to confirm it in order to achieve a measured move up, basicalli an "inverted" ABC up to 22k.
Failing to do so, (whatever the route - ABC there is just sketched) would be pretty messy ad we already have some bad omen:
1) a rising wedge (exmaple in red) 2) a bearish divergence (purple) on RSI.
So, simply put, from here bulls need to prove able to:
1) negate the rising wedge, breaking it up. 2) pierce up through upper daily BB (and close above) . 3) cancel that divergence by setting a HH in the 22k.
That's pretty tricky.
They do have a chance, especially if NASDAQ bounces, but you should be aware of the risks and act accordingly. Because failing the above scanrio, bears would likely regain the initiative. Albeit temporarily imho.
Hence be sure to protect your gains with a stop.
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Very tricky even down to intraday TF:
Let's wait for DOW and NASDAQ.
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Schwerpunkt. Let's hope the show will be worth the wait.
Eyes on RSI/W on monday.
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At resistance:
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Clearly rejected by upper bound of the rising wedge.
Still in bearish divergence with no HH. Messy, as expected.
Weekly close was above MA20/W, so let's see whether 20,6k can hold for. A bounce is possible.
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Longer term:
RSI/W was broken up, that's good. Will look for confirmation on next W close.
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FTX drama led to los of 20,6k, after the failure to overcome the rising wedge on saturday. Price saw a sudden slump, with infraction of the lower bound of the rising wedge.
Fragile scenario, worsened by the ongoing divergence. Failing to overcome 20-20,2k would pose a serious threat to the odds of completing the upper route.
Given the picture on 4H: oversold, overextended and diverging, i think a pullback towards the edge of the rising wedge is likely to happen.
Then to be re-evaluated. 20-20,2k is the key resistance.
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No bounce, straight to lows. Impressive.
I think no point guessing till CZ / SBF speak.
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No news is bad news.
While no irreparable damage has been done to the "upper" route, as we currently still it close to june low, it's time to look and prepare the lower route as well.
This is my battle plan:
1) i'm putting a foot in right here, by allocating 1/3 of liquidity in 16,9-16,6k area). Started already, by filling down to the 16,8k mark. Main idea here is cutting a wick / catching a technical bounce eventually.
2) I've scattered 4 buy order in the 14.300-12.800$ area, along the lower route. Just in case not only FTX, but whole Alameda gonna fail. 1/3 liquidity as well.
3) Now hands free, I'll use remaining liquidity to try and catch a knife eventually.
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Not much of a movement, so far.
Adding a couple buy orders @15350$ and 14550$ and letting them run overnight. Good night.
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The picture so far.
Soon for commenting, i prefer waiting for dust to settle.
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It seems we won't lack buying opportunities for a while. Let's see.
@lanreydon, soon to say mate, you see what's happening, M&A :) Anyway, we may see a bounce. Point is recovering 20-20,2k. That may prove hard.
We'll see.
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Hi Fab, just an observation, did you notice that after every 9th candle almost every single time one last flush down took place?
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@nellopennello, I think on W we have just 5 previous confirmed cases, before the current "candidate" 9th. (Mind that count confirmation is on candle close)
Two times a low was set on 6th or 7th red TD count candle (and current "candidate" low sits on 6th). Three times on the first of second candle after the 9th. Minimal recovery from low was +42%. Unless i missed something.
Obviously stats based on just 5 cases are not that meaningful. Anyway, a 9th TD count candle is mostly a hint of pretty extended PA. Hence a heads-up and a reason for actively looking for further hints elsewhere (in patterns, volume or divergences).
Finally, by the way, we have an unprecedented red TD count 11 in the making on M, which imho copes with an unprecedented green TD count 15 on DXY. Let's see as both tend to hint a bear trap, worst case.
nellopennello
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@ft-73, "Obviously stats based on just 5 cases are not that meaningful", I agree. One can't make a stat from this, but I thought it was interesting to underline in some way. In general not a bad spot to go long seen that downtrend extension, but - how I said elsewhere - the ATH open interest is highly concerning to me. I feel like we are on the edge of a cliff. Maybe an inverse cliff ;)
JoyBoyVegae
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Not bottomed .. don’t be foolish. The bear market isn’t over yet.
wargolynch
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Your trendline starting in 2020 is not one. For it to be accurate we'd need BTC to finally form a bottom here, validating a second contact point.
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@GreenValleyTrading, thanks for your contribution.
To be fair that trendline looks pretty legit to me and the more you zoom out (e.g. 2W, M) the better it gets. That's 2W, for instance:
What you're pointing out would basically act as a confirmation, albeit lagging. Same as the crossover of MACD VXI on 2W, see below.
Thank you, take care.
wargolynch
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@ft-73, Your second contact point IS NOT validated. We're not talking about just one wick some candles ago, but the full potential higher low! For it to be valid, you'll need the price to go up from now in order for this whole higher low to be validated as a second contact point. Then only this trendline could be useful in the future. That's not only classic theory but also good sense from experience. Below is an example where each circle is equal to one contact point. You'll also want to consider using the log chart in the future for much better accuracy. Here are some examples of macro trendlines on linear chart since 2010: Do you find those useful and accurate? Even when using the C.fork double trendline confirmation strategy, it is not always accurate. Whereas macro trendlines on the log chart are definitely accurate.
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@GreenValleyTrading, You tell me contact point not valid, but i'll tell you not invalid either. Given the HL and givem the volume on contact, for instance.
Could go on on that, yet i see no point in academic debate. Especially since it does not alter the overall picture.
If you wonder because i'm not concerned about validation (nor confirmation), the answer is i focus on scenario *anticipation*. By definition you *can't* anticipate, validate and confirm at the same time.
Achieving a confirmation means accepting a degree of lagging information. That's a pretty delicate choice i leave to my readers, whereas my point here is hinting a plausible scenario. That's risk shaping.
Most opportunities arise *way* before confirmations do, and i value those despite the risk.
That's the reason i posted contibutions on key dates, such as June 18th, for instance:
or on the march 2020 crash:
Ask me for validation and i won't be able to post such kind of contributions.
I'm pretty sure my readers are perfectly capable to evaluate the scenarios i paint and to extract any value, eventually. That's the whole point of my contribution here, if that wasn't clear already.