Here's What The Bitcoin Shorts Are Telling Us (BTC Shorts)
Hi friends! Welcome to this update analysis on Bitcoin! In this analysis, we will be comparing the price action of BTC to the BTC short interest. So, without further ado, let's get right to it!
In front of you, I have a comparison of the weekly BTC shorts line chart (in dark grey) to the BTC weekly line chart (in light grey.) As you can see, nearly every time the BTC shorts have formed a deep low (pink circles,) that has corresponded to a trough on the RSI, a selloff has ensued (red arrows.) Currently, we can see that BTC shorts appear to have reached a pivotal low. I have considered that the shorts could continue to drop lower. However, we can see that BTC shorts are on an uptrend, with higher highs and higher lows, since the low that was printed on July 23rd. From that point, the shorts printed three consecutive highs, each higher than the last. Then, shorts fell to a higher low on November 5th. After that, we can see that shorts printed yet another higher high, and then plummeted to print what now appears to be another higher low on January 14th. Based on this pattern of higher highs and lows, we can technically assume that shorts are now on the rise. With that said, considering how price has fallen after almost all of the previous examples of this action, there is a technical risk of a selloff, as short interest looks set to print a substantial increase.
If you recall from my last BTC analysis, I exposed the extensive technical similarities of the current market condition, to the bottom that was formed during the last bear market. There is definitely an undeniable fractal similarity. However, we should have seen a major rally by now, for the similarities to continue. It's hard to say though, until we begin to exit this tight range that BTC is currently trading in. For your reference, I have attached the BTC price chart comparison below. You can see the range that I'm referring to there, denoted as "Consolidation Period After H&S." On the BTC price chart, we're seeing sharp rejections of rally attempts, and sharp rejections of attempted selloffs. So, there is major indecision in the market right now. As soon as we exit this area, either up or down, the move will be explosive.
The shorts are telling us that price is likely to fall from here. The extended consolidation period after the head and shoulders is also telling us that we may be deviating from the fractal pattern in the 2015 bottom. However, BTC still remains inside of the triangle. Unless it breaks down, the fractal bottoming pattern remains intact. Personally, I believe that there will be a another major move to the downside, but that belief is irrelevant until the market confirms it with a breakdown of the triangle. Until that happens, I have to give credence to the notion that we could be bottoming here, particularly if the fractal pattern holds.
In summary, shorts are on the rise and price is at a critical juncture. If BTC breaks down from the triangle, shorts would spike, corresponding to the apparent higher low that appears to have been printed on the BTC shorts chart. If the triangle breaks down, the initial target is at the weekly 200 MA (in pink on the attached chart) around 3300, or a double bottom low around 3100. A break below that, would send BTC to the bottom of the downtrend channel, somewhere in the low 2000s.
Be smart, be nimble, and watch the data unfold. Good luck trading everyone!
I'm the master of the charts, the professor, the legend, the king, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-JD-
In front of you, I have a comparison of the weekly BTC shorts line chart (in dark grey) to the BTC weekly line chart (in light grey.) As you can see, nearly every time the BTC shorts have formed a deep low (pink circles,) that has corresponded to a trough on the RSI, a selloff has ensued (red arrows.) Currently, we can see that BTC shorts appear to have reached a pivotal low. I have considered that the shorts could continue to drop lower. However, we can see that BTC shorts are on an uptrend, with higher highs and higher lows, since the low that was printed on July 23rd. From that point, the shorts printed three consecutive highs, each higher than the last. Then, shorts fell to a higher low on November 5th. After that, we can see that shorts printed yet another higher high, and then plummeted to print what now appears to be another higher low on January 14th. Based on this pattern of higher highs and lows, we can technically assume that shorts are now on the rise. With that said, considering how price has fallen after almost all of the previous examples of this action, there is a technical risk of a selloff, as short interest looks set to print a substantial increase.
If you recall from my last BTC analysis, I exposed the extensive technical similarities of the current market condition, to the bottom that was formed during the last bear market. There is definitely an undeniable fractal similarity. However, we should have seen a major rally by now, for the similarities to continue. It's hard to say though, until we begin to exit this tight range that BTC is currently trading in. For your reference, I have attached the BTC price chart comparison below. You can see the range that I'm referring to there, denoted as "Consolidation Period After H&S." On the BTC price chart, we're seeing sharp rejections of rally attempts, and sharp rejections of attempted selloffs. So, there is major indecision in the market right now. As soon as we exit this area, either up or down, the move will be explosive.
The shorts are telling us that price is likely to fall from here. The extended consolidation period after the head and shoulders is also telling us that we may be deviating from the fractal pattern in the 2015 bottom. However, BTC still remains inside of the triangle. Unless it breaks down, the fractal bottoming pattern remains intact. Personally, I believe that there will be a another major move to the downside, but that belief is irrelevant until the market confirms it with a breakdown of the triangle. Until that happens, I have to give credence to the notion that we could be bottoming here, particularly if the fractal pattern holds.
In summary, shorts are on the rise and price is at a critical juncture. If BTC breaks down from the triangle, shorts would spike, corresponding to the apparent higher low that appears to have been printed on the BTC shorts chart. If the triangle breaks down, the initial target is at the weekly 200 MA (in pink on the attached chart) around 3300, or a double bottom low around 3100. A break below that, would send BTC to the bottom of the downtrend channel, somewhere in the low 2000s.
Be smart, be nimble, and watch the data unfold. Good luck trading everyone!
I'm the master of the charts, the professor, the legend, the king, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-JD-
Comment:
Comment:
A breakdown has occurred from the triangle in BTC, which is a deviation from the pattern seen during the absolute bottom of the last bear market. This technically increases the likelihood of lower prices, as long as we do not rally back into the triangle. However, BTC could still hold the weekly 200 MA (in pink,) which is where the last bear market bottomed. Below that, we have double bottom around 3100ish, and then below that we would likely see a fall to the low 2000s at the bottom of the downtrend channel.