Executive summary
If you are an investor, you should hold your positions and wait this out. If you're a trader, it's too soon to make a decision. And if you are a short seller, you may be about to lose your shorts.
My spread trading strategy covered in the last few BTC charts is still yielding profitable trades and is enough to blunt much of the daily percent price slide of BTC as it falls. This offers significant protection from the decline and cost averages my traded portion of BTC downward during this correction setting up for higher profits on the rebound.
As I write this at 18:08 UTC time, BTC has punctured the 7944 level on the daily chart, and this puts us in the area of a possible double bottom, which would be helpful for people with long positions. Since a confirmed double bottom is a bullish sign.
It's my opinion that IF we close this bar Below 7432, or 5 1/2 hours from now will be marking the entry into a bear market for BTC. If that were the case, then in my opinion the next downtrend support is in the area 5964 followed by 3627. Unfortunately I don't think there's much resistance down to these levels.
My Chart
Looking at my chart, you will see a number of turquoise lines, the larger set indicates the general downtrend since the all-time high, and the bottom line of that large set indicates the overall uptrend going back for some time. The intersection of these two lines is a squeeze point from which the prices are likely to burst out either up or down side. The smaller set of lines is a falling wedge reversal pattern, the restriction cone is getting tighter and it COULD or MIGHT point to a bull resistance break but has not manifested as yet. This would be indicated by a bar closing above the upper line of the descending wedge. Lastly, the Red and Green moving average lines. The red line is a 50 period moving average, the green line is a nine period moving average. This is an old trusted indicator, it's drawback is that it tends to be considerably late in indicating the trend. Its strength is that its indications are pretty decisive within the bounds of the periods that it is set to monitor. One thing we can conclude from the current situation with the nine period green line is that as it has moved below the red line, we are now in a negative trend at least for the short-term. Since the lines are widening with relation to each other it looks though it may be strong and could last.
One positive note has been a generally declining volume in the selling over the last few bars. This may be due to traders watching the same patterns or similar patterns to the ones that I have waiting for this bar to close today to indicate the direction of market.
What does it mean?
This does not mean that Bitcoin is dying, or that the investment is no longer valid. This is a process called price discovery which goes on 24/7 with Bitcoin. The danger here is the Taxi driver who bought at 20k or those who invested long-term that they should panic and sell out at a low, or if you are trading in shorts you risk the potential being caught in a short squeeze. Just to reiterate, I do not advocate trading in margin.
This is a hairy situation to be sure, and I would advise for most people particularly long-term investor that doing nothing right now is the best course of action. I still have every expectation that BTC will rise to new all-time highs in the not-too-distant future.
The cautionary aspect of this story is that should we breach 5964, we may be entering into a long term bear market which will mean that we are holding our investments at a paper loss for some period of months. This is preferable to dumping in a panic and then being caught unawares as the market turns on a dime as it is wont to do and skyrockets higher leaving you behind holding cash.
I am not a registered investment advisor. Do not interpret my writings as investment advice or as buy and sell signals.
If you are an investor, you should hold your positions and wait this out. If you're a trader, it's too soon to make a decision. And if you are a short seller, you may be about to lose your shorts.
My spread trading strategy covered in the last few BTC charts is still yielding profitable trades and is enough to blunt much of the daily percent price slide of BTC as it falls. This offers significant protection from the decline and cost averages my traded portion of BTC downward during this correction setting up for higher profits on the rebound.
As I write this at 18:08 UTC time, BTC has punctured the 7944 level on the daily chart, and this puts us in the area of a possible double bottom, which would be helpful for people with long positions. Since a confirmed double bottom is a bullish sign.
It's my opinion that IF we close this bar Below 7432, or 5 1/2 hours from now will be marking the entry into a bear market for BTC. If that were the case, then in my opinion the next downtrend support is in the area 5964 followed by 3627. Unfortunately I don't think there's much resistance down to these levels.
My Chart
Looking at my chart, you will see a number of turquoise lines, the larger set indicates the general downtrend since the all-time high, and the bottom line of that large set indicates the overall uptrend going back for some time. The intersection of these two lines is a squeeze point from which the prices are likely to burst out either up or down side. The smaller set of lines is a falling wedge reversal pattern, the restriction cone is getting tighter and it COULD or MIGHT point to a bull resistance break but has not manifested as yet. This would be indicated by a bar closing above the upper line of the descending wedge. Lastly, the Red and Green moving average lines. The red line is a 50 period moving average, the green line is a nine period moving average. This is an old trusted indicator, it's drawback is that it tends to be considerably late in indicating the trend. Its strength is that its indications are pretty decisive within the bounds of the periods that it is set to monitor. One thing we can conclude from the current situation with the nine period green line is that as it has moved below the red line, we are now in a negative trend at least for the short-term. Since the lines are widening with relation to each other it looks though it may be strong and could last.
One positive note has been a generally declining volume in the selling over the last few bars. This may be due to traders watching the same patterns or similar patterns to the ones that I have waiting for this bar to close today to indicate the direction of market.
What does it mean?
This does not mean that Bitcoin is dying, or that the investment is no longer valid. This is a process called price discovery which goes on 24/7 with Bitcoin. The danger here is the Taxi driver who bought at 20k or those who invested long-term that they should panic and sell out at a low, or if you are trading in shorts you risk the potential being caught in a short squeeze. Just to reiterate, I do not advocate trading in margin.
This is a hairy situation to be sure, and I would advise for most people particularly long-term investor that doing nothing right now is the best course of action. I still have every expectation that BTC will rise to new all-time highs in the not-too-distant future.
The cautionary aspect of this story is that should we breach 5964, we may be entering into a long term bear market which will mean that we are holding our investments at a paper loss for some period of months. This is preferable to dumping in a panic and then being caught unawares as the market turns on a dime as it is wont to do and skyrockets higher leaving you behind holding cash.
I am not a registered investment advisor. Do not interpret my writings as investment advice or as buy and sell signals.