Bitcoin is looking absolutely great right now, sitting pretty at the 1.618 Fib extension from the March low. This is my first analysis which includes the "D.M. Ward Method".
At this level, I would expect profits to be taken, leading to a pullback, possibly to the 100 MA @ ~ 11.5k.
On March 12, substantial selling volume led to a 64% decrease in price. The following day saw almost equal volume, but was only able to recoup a small portion of lost volume.
While the Red RSI is increasing and the energy (grey area) still above 56, there's just not substantial enough volume for me to make a solid decision one way or another.
I anticipate traders who either lost money or bought in in March to take profits at this point, these will probably be immediately bought up. So we likely have some sideways movement to look forward to, a good chance to get some more information. Daily candle close above the 1.618 level, accompanied by volume to back it up would no doubt drive the market to test the ATH by the end of the year.
Now is the time to: 1. Stick to your strategies! 2. Keep a close eye on different time intervals for any divergence. 3. Not FOMO! Now is a great time for accumulation if you keep a safe stop-loss. 4. Watch for whale moves: large increase in trading volume is going to make or break positions here.
Personally, I'm taking some profits now, placing a sell order just below the psychological 15k level, with a stop loss at our previous high of 12.4k. The recent news of PayPal offering crypto soon is some good news to sell on, and now that we have multiple major consumer focused payment platforms offering Bitcoin, I'm considering things bullish for quite a while. But PayPal has a lot of customers, and is going to need a lot of Bitcoin to meet their demand, and they're not going to want to buy at the yearly high either.
The big question now is when's the pullback, and how far?
Interested to hear your thoughts! Is BTC going to cool off for a little while or are we going parabolic to a new ATH? Don't forget to like if you've found this helpful!
Big thanks to David @WyckoffMode for the indicator and all the work put into educating traders and providing quality analyses.
Cheers!
Trade active
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Opened trade with BTC purchased between $4.5-6.8k (win-win). Keeping fairly tight stop-losses in case this is just a breakout in response to PayPal news. Unless the volume drops out I'll be sticking with the following for now, percentage is amount of BTC allocated to each target:
We'll see what Monday brings, but BTC looks like it may move sideways for a while as re-distribution and accumulation takes place at what could very well be a new support level.
Currently opened daily dollar cost average purchases for the duration of sideways movement while I await a solid indication of a trend continuation/reversal before going back to weekly purchases.
You're taking profit at 15K? That's what you mean?
With regard to holders taking profit, I think the ones who are more likely to take profit now are those who bought before the March lows. The drawdown trauma might spur them to reduce exposure now, or take partial profits. Those who bought at the March lows and still holding are likely smiling now and sitting tight. I just read the CME COT of traders report: asset managers and institutional tarders are adding to their long positions. Leveraged funds have still a lot of shorts and also added to their short positions. I don't know what sort of operators are these, but they could be linked to the retail industry (ETFs or hedges for brokers?). As the report refers to October 20 positions there's likely been a lot of short covering on October 21, which leads to my second point: there might be room for more short covering, whereas asset/institutional managers are adding to their longs. All of this is pure conjecture (intelectual speculation). More fundamental research is needed for better insights in this regard, such as number of units available on exchanges, who's selling, who's holding, etc.
Well, particularly, I think this market has more room to the upside, especially if the 2019 highs are taken, we could see then a buildup of momentum which could take us to ATH (taking 2017 highs). We also had breakout of Bollinger Bands on the weekly and daily charts. In the short term, we had a high volume on October 21. That's very healthy. My 2c.
HeyJonBray
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@idz, Very healthy indeed. Breakout from Bollinger bands and we're seeing a nice parallel channel form on the hourly as things develop. Just moved all my purchases from March-April into the exchanges.
I have a fairly tight stop loss right now. Currently have 4 trades active:
T1- 50% : 13.4k - Stop loss: 11.8k
T2- 20% : 14.1k - Stop loss: 11.5k
T3- 10% : 15.0k - Stop loss: 11.2k
T4- 10% : 17.2k - Stop loss: 10.8k
All the BTC I'm currently trading with was purchased between 4.5k - 6.8k, so even if this is a false breakout and I hit my stop-loss I'm still covered.
Risk-reward ratio right now is looking pretty good. I'm fairly positive a correction is coming, but we've been getting some nice volume coming in, and seeing higher lows on every chart from 1D all the way down.
The last two targets are iffy, and I expect that my stop-loss will be triggered on T3 & T4 before the target is reached. Judging from a very fresh parallel channel on the 4H chart, I expect that I'll likely hit T1 & T2 and be able to buy back in under 11k.
The double top in Jun-Jul 2019 is a promising signal, we hit resistance ~13K with relatively low volume compared to the last few months, and we have a very strong trend going right now that would be foolish to trade against. Cumulatively, we've seen more volume during the most recent bull run than we had leading up to said double top. Since the trend is in and strong, a breakout in volume could easily cause BTC to go parabolic and test close to ATH levels.
UnknownUnicorn100937
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@HeyJonBray, Thanks for sharing. I also had these targets around 13K and 14K in mind. I am now more inclined to believe that we're going straight up to 15K on the weekly. This is quite optimistic, of course. A lot will depend on taking the 2019 highs. Anyway we'll know in the coming days.
I am now also studying Pine Script to back test some possible mechanical strategies, which might have an edge (if any) on buy and hold and dollar cost averaging. Looking at previous bull runs, if the market gets that frenzy, it might be difficult to work with swing trade strategies, other than on longer term time frames. In a runaway bull run I think it's more practical to buy dips and liquidate positions on signs of a long term reversal/exhaustion.
HeyJonBray
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@idz, Definitely good to run backtesting; there's some good strategies in the public library that you can start and a lot on github and other repo sites that I've found helpful. Obviously, the best strategy to test if your own to determine it's effectiveness over the long run. Glad you're taking the time to study Pine Script - read the docs; watch some videos on general conditional logic as these are the functions that take scripts to the next level. If you can't find Pine Script specific ones, study JavaScript for what you can't find in Pine... they're close enough conceptually.
On runaway bull run that are clearly continuing, I've personally found my most profitable strategy is to set a risk:reward ratio up front; buy dips; daily purchases on sideways movements, and always keep a stop loss that matches your risk:reward ratio.
For Bitcoin specifically the most profitable indicators I've found over the years are Pivot Points and Bollinger Bands. If you can learn to analyze 3-4 time frames at once using these methods you'll be able to get an intuitive overview of the market at a glance without using any indicators.
But the most important thing you can do is research, test, tweak, research, repeat.
You're doing just that, and it makes me very happy to see traders taking the time to go in-depth with their strategies.
When I have a free moment I'll send you a link to my GitHub trading box which has tons of back-testing tools and a link to an API for a continuously updating chart compiled in Python and JavaScript (which dramatically reduces the amount of time it takes to do backtests).
Keep putting in the work! I'll be following your success and always here to answer any questions.
I'm by no means a master trader, I'm constantly learning still, but I've reached a point where over 75% of my trades are profitable and am starting to put together resources to give back to the communities that have helped me get here.
Cheers,
Jon
UnknownUnicorn100937
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@HeyJonBray, Take it easy with programming. I am not a programmer. :) But I do have some experience with script based backtesting software such as Trading Blox Builder. I am studying Pine Script so as to back test some strategies for this market, if they can beat buy & hold or dollar cost averaging. Is there any specific, freely available strategy here on Trading View you find interesting? I found an interesting strategy called "Trend Following Long Only Strategy" by coingrabber, which seems to be a good one. Tweaking the lookback period to 100 on the daily, it beats buy and hold. When I finish studying Pine Script, I intend to try to improve some of these strategies, such as adding a trend filter to define on and off the market periods and also some a long only counter trend element to the trend following one, when the trend filter is on the market. This one by coingrabber is based on ATR, and a little sophisticated. But I think it's possible to come up with similar models with simpler indicators.
About your 75% winning rate, that's astonishing. Congratulations. I am afraid I am not able to achieve that.
I like Bollinger Bands to identify volatility contraction and expansion periods. But I prefer very traditional, old fashioned technical analysis. For this market I think it would be interesting to use a mechanical system with a discretionary overlay, so as to say, to identify trading regime, the overall trend, etc. Hence my interest on back tests to come up with some viable, dummy proof strategies. :) With regard to the rules, they have to be simple and not overfitted (meaning, it should be able to work on different markets with similar or quasi similar characteristics, not using optimized values).
HeyJonBray
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@idz, Sorry there bud, programming is so ingrained in everything I do I forget not everyone has the time or knowledge to go so in depth. Keep it concise Jon... keep it concise. lol
I've used that Coingrabber strategy with some success after tweaking, but it's been so long I couldn't tell you what variables I used. I generally run my back-testing off TradingView in Python.
Check out: "Backtesting-Trading Engine" by PineCoders.
This was the strategy that I first used when I was learning Pine Script. They made a very sophisticated system that can be used for running tests that is not overly complex (the comments in the code walk you through everything). It can also apparently output indicators for you based off successful strategies but I've never used that feature.
UnknownUnicorn100937
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@HeyJonBray, Wow! I will go through it as soon as I finish grabbing the main concepts behind Pine Script. That's awesome. I should've been an electronic engineer, programmer, astronomer and the stuff. I ended up following other walk of life, though. I am still looking for ways to integrate it into my path. Thanks a lot! All the best!
HeyJonBray
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@idz, Always time for integration! I programmed as a hobby prior to it being my main source of income, but I studied biomedical engineering and physics. It's been years since I've done any work in my "chosen" fields haha.
UnknownUnicorn100937
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@HeyJonBray Thanks. I am reading a book by Bill Burnett, based on Design Thinking, called "Designing Your Work Life". It's a great read. I talked to a programmer and he commended me to start with Harvard CS50. Well, I will stop here. I got flagged as bot by TV and I am not able to post comments. Just discovered I could do it via mobile app. All the best.
With regard to holders taking profit, I think the ones who are more likely to take profit now are those who bought before the March lows. The drawdown trauma might spur them to reduce exposure now, or take partial profits. Those who bought at the March lows and still holding are likely smiling now and sitting tight. I just read the CME COT of traders report: asset managers and institutional tarders are adding to their long positions. Leveraged funds have still a lot of shorts and also added to their short positions. I don't know what sort of operators are these, but they could be linked to the retail industry (ETFs or hedges for brokers?). As the report refers to October 20 positions there's likely been a lot of short covering on October 21, which leads to my second point: there might be room for more short covering, whereas asset/institutional managers are adding to their longs. All of this is pure conjecture (intelectual speculation). More fundamental research is needed for better insights in this regard, such as number of units available on exchanges, who's selling, who's holding, etc.
Well, particularly, I think this market has more room to the upside, especially if the 2019 highs are taken, we could see then a buildup of momentum which could take us to ATH (taking 2017 highs). We also had breakout of Bollinger Bands on the weekly and daily charts. In the short term, we had a high volume on October 21. That's very healthy. My 2c.