MikeLeChat

The end of the correction COULD be nigh

BITFINEX:BTCUSDLONGS   BTCUSD Longs
Hello it's Mattress Mike with a view on the next few days;

Now hindsight is 20/20 and we all make mistakes, the important thing is to learn from this. This is an important consideration when reading adive of the many armchair experts calling for sub $3k on the basis that they have been correct so far. But herein lays the problem that everyone is correct until proven wrong, there is difference between correctly identifying that we are in a downtrend from identifying when it will end. But I will say that anyone who says they are certain Bitcoin is going to move as they claim, often because they have a paid subscription service and are so brilliant at trading that they really need you to give them money right now, should be treated with a healthy amount of scepticism, some scenarios are more likely than others but at this point in time a compelling argument can be made for both the bulls and the bears depending what angle you look at it.

So firstly I realise that my posts recently have been very speculative, but this is the situation we are in at the moment where we can only use ifs and buts, I feel very strongly towards staying neutral and trading the opportunities in front of you so here is the current situation in my own opinion;

We have a few interesting things today;

Bitcoin longs in a bearish ascending wedge shown above, we have broken out but I am not convinced this will last;

Meanwhile we have Bitcoin shorts in a descending wedge which looks at risk of breaking down, although again I am not convinced that this is more than a shakeout and we will see it break upwards.


So on the face of this it seems clear that Bitcoin is going to bite the dirt, right? Well it's not quite that clear cut. First we need to be aware that the masses short the bottom, we see it time and time again today is no different. Therefore a final parabolic rise of shorts is to be expected. The second and more important point I want to make is the current condition of the daily view of Shorts;


Here we can see a more bearish picture where we have a failed break and is looking to close on a shooting star candle confirmation, suggesting shorts are running out of steam.

The above leads me to conclude that we are near at least a local bottom but that we will see one last strong capitulation first, in part my reasoning is a combination of the strong demand zone we are entering as well as the condition of shorts overall, another failure of breaking the green trend line on the chart below will trigger a lot of late shorts and this combined with the daily bearish view makes me think that timing wise it will be a Monday reversal.


This is of course only conjecture without confirmation, but I don't buy the narrative that we are going to simply drop like a rock as the volume tells a different story. Despite the negative price action volume is unimpressive which tells of course that buyers have yet to step to the plate in force, but also shows an interesting picture of when the big players left the market and are waiting for the right time to re-enter. Whether this will be a large bounce or simply a resistance test is impossible to say right now, due to the trend we have to lean towards it not being, but making early assumptions would be foolish at this point in time.

We have strong support at around $5,500 and again at $5,300 so my eyes will be there to see what kind of reaction we get should breakdown further today.

Jun 25
Comment: Ah it's always nice when Bitcoin decides to behave while I’m asleep, a rare thing in my time zone.

So we had a nice break upwards and now we find ourselves in a difficult situation, I'm still seeing hesitation in the market and we stalled before we reached resistance at $6,300 BUT we did manage to break $6,150 and are currently hovering in range around this resistance. This all makes me feel very conflicted about what happens next, I have developed with trust issues with Bitcoin.

Firstly I mentioned above how there's a number of ways to approach this situation, for example we can view Bitcoin longs in this way;


- Broke upwards from the small ascending triangle
- Appear to still be in the early-ish stages of an ascending wedge
- Is within a larger ascending triangle

So this could fit the following narrative very nicely;

- We are going to continue upwards for a short time perhaps until the 4th, 5th of July.
- There will be a large drop
- This will break out into a bull run

Indeed we can view the shorts chart in such a way that supports this timeline;


But at the same time I need to stress that we CAN view it in this way, there's more than one way to look at things and a re-test of support before any of this happens cannot be ruled out.

So let's take a look at today;


We have just had a failed break upwards from a descending triangle which we can expect of course to break downwards. The question here however is whether this is a failure of the whole breakout or if we are simply printing the right shoulder of an inverted H&S pattern. I am very unsure of this at the moment.

If we look at some indicators we can see that we look quite shaky on lower time frames with a real lack of momentum. High time frames are not a lot better, looking oversold on the 4 hour with a flat RSI suggested short term exhaustion, whilst it's too soon draw much meaningful from the daily.

Right now I am considering a short from $6,170 and close at the first sign of a bounce, alternatively if we can make a strong break of $6,300 I will likely to be going long, however I am very hesitant to trade anything but a confirmed breakout in the current market conditions so will most likely sit on the sidelines until I am comfortable with all aspects of a trade. Corrections are no more than games of patience, rush in and you will lose more often than you will win.
Jun 25
Comment: I just wanted to share my best case scenario for the coming days, I stress that this is the best case scenario in my mind and we need a number of confirmations before it becomes more than that

Jun 25
Comment: I forgot to note that in this scenario we could be about to see a bounce up to $6,250 ish before getting rejected and sent back down to form the right shoulder
Jun 25
Trade active: OK so that was a nice rejection of $6,250 and we are overbought now on every time frame all the way up to the 4 hour.

Now we have to see how Bitcoin reacts to the $6,150 support level. It would be better if we didn't bounce here as we need to come down to get a nice rune at breaking $6,250.

I repositioned the trendline by a tiny amount just to neaten things up and so now you can see how this all comes together;

Jun 25
Comment: My only caution here is that this inverted H&S has been a textbook easy guess so far, that always makes me uneasy because Bitcoin shouldn't be easy!

Do not be catching any knives today as an alternative scenario can see us having a double bottom in the $5,700 area, especially since when/ if we fall under $6,000 I'm anticipating a few panic sells to trigger who bought in yesterday and don't want losses erased completely.
Jun 25