BTC showing a short term move upwards before a retest of $3,150
Cradle - a point or place at which something is invented or provided
As you can see on this chart BTC has reversed off of cradles comprised of intersecting trend lines and fib levels.
It's tough to see the pins on the candles with all the overlays but I assure you it's forming a nice morning doji complete with a strong spinning top right on the downtrend line and after piercing the .236 Fib level for just a moment.
RSI indicates the market is oversold as does the MACD and is signaling that a bullish crossover is imminent.
Considering more trades were initialed via buying vs. selling in this last move downwards leads me to believe it's a consolidation before a move upwards.
It's important to note that this last move downwards has created a lower low, shadowing the prior rally. After reaching the target sell zone (forming a lower high), I expect BTC to reverse and retest the 12/15/18 low around $3,150.
Without getting to far ahead of myself, if BTC gets strong support at $3,150 then that would create a double bottom and strong bullish action should follow. If it fails prepare for much lower lows, forming an inverse head to the shoulder that is formed by the drop on 11/13/18 and the current price action.
As you can see on this chart BTC has reversed off of cradles comprised of intersecting trend lines and fib levels.
It's tough to see the pins on the candles with all the overlays but I assure you it's forming a nice morning doji complete with a strong spinning top right on the downtrend line and after piercing the .236 Fib level for just a moment.
RSI indicates the market is oversold as does the MACD and is signaling that a bullish crossover is imminent.
Considering more trades were initialed via buying vs. selling in this last move downwards leads me to believe it's a consolidation before a move upwards.
It's important to note that this last move downwards has created a lower low, shadowing the prior rally. After reaching the target sell zone (forming a lower high), I expect BTC to reverse and retest the 12/15/18 low around $3,150.
Without getting to far ahead of myself, if BTC gets strong support at $3,150 then that would create a double bottom and strong bullish action should follow. If it fails prepare for much lower lows, forming an inverse head to the shoulder that is formed by the drop on 11/13/18 and the current price action.
Comment:
As of this update, buys are outpacing sells 20k vs. 18.5k in this latest flag formation (doesn't include the bullish candle, just the flag consolidation portion). Price should hold or stay within the buy zone before moving upwards. A break below the green trend line and .236 fib level should raise caution. The red trend line above the stop loss zone is essential to preventing a retest of $3,150 if this short term move is going to enter the sell zone. So far, this consolidation is healthy and a move upwards appears to be likely in the next week or so.
Comment:
Since my last comment 75 minutes ago, strong selling brought the price right down to the green support line within the buy zone. I anticipate the hovering around here for the next few hours so the daily, 8 hr and 4 hr candles close on this support. The next few days will be telling about where the market is headed. Here are my scenarios in order of what I believe will happen:
1. Green support line holds and the next few days will consolidate within $3,520 and $3,650 before moving into the sell zone. If this happens, there's a good chance price will temporarily retreat from the sell zone before moving higher to test ~$4,000 with a peak of $4,325. I *wouldn't* target those levels for selling. It's important to stick to the setup so I'd exit in the sell zone then I'd make some small buys during the temp. pullback off the sell zone and sell it off again when price reenters the zone. I'd use a tight stop loss under the pullback reentry so any losses will be minimal and overall I'm in 7-9% profit.
2. Same as scenario 1 except the temp pullback isn't temporary and the price moves down towards $3,150, retesting trend lines and fib levels along the way. According to my trade setup in scenario 1, the stop loss would be triggered and while my profits wouldn't be as much, I'm still profitable and waiting for a new setup.
3. Price plummets and triggers the stop loss in pink. In this scenario I'll be taking an average loss of ~5% and will have to lick my wounds while I regroup and plan a new trade setup.
4. Price explodes in the next 48 hours and moves into the sell zone. I highly doubt this will happen and if it does, exit in the sell zone and wait for a new setup. This would be obvious manipulation to squeeze shorts and trigger stop losses and it goes against principals of technical analysis. However, that's to be expected in this space and while unlikely, it's not impossible for this scenario to happen which is why I recommend a stop loss zone and will sometimes adjust it based on where the current price action is.
1. Green support line holds and the next few days will consolidate within $3,520 and $3,650 before moving into the sell zone. If this happens, there's a good chance price will temporarily retreat from the sell zone before moving higher to test ~$4,000 with a peak of $4,325. I *wouldn't* target those levels for selling. It's important to stick to the setup so I'd exit in the sell zone then I'd make some small buys during the temp. pullback off the sell zone and sell it off again when price reenters the zone. I'd use a tight stop loss under the pullback reentry so any losses will be minimal and overall I'm in 7-9% profit.
2. Same as scenario 1 except the temp pullback isn't temporary and the price moves down towards $3,150, retesting trend lines and fib levels along the way. According to my trade setup in scenario 1, the stop loss would be triggered and while my profits wouldn't be as much, I'm still profitable and waiting for a new setup.
3. Price plummets and triggers the stop loss in pink. In this scenario I'll be taking an average loss of ~5% and will have to lick my wounds while I regroup and plan a new trade setup.
4. Price explodes in the next 48 hours and moves into the sell zone. I highly doubt this will happen and if it does, exit in the sell zone and wait for a new setup. This would be obvious manipulation to squeeze shorts and trigger stop losses and it goes against principals of technical analysis. However, that's to be expected in this space and while unlikely, it's not impossible for this scenario to happen which is why I recommend a stop loss zone and will sometimes adjust it based on where the current price action is.
Comment:
30 minutes to go and the buys still outpace the sells 23.9k vs. 23k (including the major selloff the last few hours). This gives more confirmation to a consolidation before moving into the sell zone.
Comment:
The daily, 8hr and 4 hr candles just closed. Price has been trading within the limits noted in the last comment. Since 11am on 1/10/19 (after the strong selloff) buys continue to outpace the sells 94.8k vs. 93.7k. I prefer the spread to be greater between the two, however given the current market I believe it's significant enough to take into consideration. An upper trend line has developed since the last comment, forming a symmetrical triangle with resistance around $3640.
The addition of this trend line leads me to believe there's going to be a decisive movement in the next 48 hours. If it breaks upwards, the sell zone shouldn't be too far away. If it breaks downwards there's two key reversal support areas at $3,540 and $3,430. If it breaks below $3,430 the stop loss zone begins ~2% under that support. If Bitcoin struggles to trade above the red support line after it moves under, it will likely continue lower before moving higher and it wouldn't hurt to close some positions before the stop loss is triggered. Opportunities for profit come and go, losses are forever. That said, I feel confident that those supports will hold (if they're even tested at all).
The addition of this trend line leads me to believe there's going to be a decisive movement in the next 48 hours. If it breaks upwards, the sell zone shouldn't be too far away. If it breaks downwards there's two key reversal support areas at $3,540 and $3,430. If it breaks below $3,430 the stop loss zone begins ~2% under that support. If Bitcoin struggles to trade above the red support line after it moves under, it will likely continue lower before moving higher and it wouldn't hurt to close some positions before the stop loss is triggered. Opportunities for profit come and go, losses are forever. That said, I feel confident that those supports will hold (if they're even tested at all).
Comment:
BTC is breaking upwards towards the sell zone.
Comment:
BTC reversed sharply after a quick breakout, eventually finding support on the .236 Fib. Currently, price is stabilizing above the green baseline and here are the updated supports/targets to keep in mind:
Support at $3,480 (-1.3%), $3,400 (-3.6) & $3,140 (-11% without stoploss)
Targets are $3,590 (+2%), $3,680 (+4.4%), $3,790 (+7.7%) & $4,000 (+13.5%)
Taking all indicators into consideration I believe the general movement will be towards the targets even if supports are tested along the way. If the stoploss is triggered, it's a tough pill to swallow but it'll hurt less than riding a steep selloff to the bottom.
Support at $3,480 (-1.3%), $3,400 (-3.6) & $3,140 (-11% without stoploss)
Targets are $3,590 (+2%), $3,680 (+4.4%), $3,790 (+7.7%) & $4,000 (+13.5%)
Taking all indicators into consideration I believe the general movement will be towards the targets even if supports are tested along the way. If the stoploss is triggered, it's a tough pill to swallow but it'll hurt less than riding a steep selloff to the bottom.
Comment:
This market is sending a lot of mixed signals and it's an understatement to say with every move up and down my uncertainty grows. On one hand supports have held extremely well. On the other, after they hold there's no bullish follow through and supports are tested once again. Having supports hold is typically a good sign, however repeated tests of them can lead them to break and fall violently, particularly in a bear market. Since Jan. 10th there have been 6 retests of various support levels, the last few at lower supports. The last three 8 hr candles have formed an evening doji/shooting star formation which is a bearish sign. We're halfway through the current 8 hr and while it's on the rise, volume after each reversal has been unenthusiastic to say the least and there is a lot of resistance to overcome around $3,600.
Technical analysis would lead me to believe that the market is going to move lower. Market makers/manipulation often use technical analysis to their advantage, driving price to certain levels and trend lines to create formations to encourage buy/sells depending on where they are going to drive the market next. The only indication I have of their intent is asking myself are more buys or sells initiated and where are they taking place? The answer: since the Jan. 10th selloff buys have outpaced sells 181k to 177k with most of the action taking place below $3,600. This leads me to believe that despite what the technical analysis is showing (bearish move down), market makers could be suppressing the price to increase their holdings before removing the resistance and driving the market upwards (but still within the bearish structure).
What does this mean about my updated targets/supports? Be prepared for both. Keep a balanced portfolio and take advantage of whatever happens next (hint: we're right at target 1 and in profit if the buys were averaged throughout the buy zone, this is a good time to rebalance if it hasn't been done already). This will be my last comment about this setup. Either the targets hit first or the stop loss does. I believe it's the former but it's challenging to choose between technical analysis or adapting to the strategy of market makers.
Technical analysis would lead me to believe that the market is going to move lower. Market makers/manipulation often use technical analysis to their advantage, driving price to certain levels and trend lines to create formations to encourage buy/sells depending on where they are going to drive the market next. The only indication I have of their intent is asking myself are more buys or sells initiated and where are they taking place? The answer: since the Jan. 10th selloff buys have outpaced sells 181k to 177k with most of the action taking place below $3,600. This leads me to believe that despite what the technical analysis is showing (bearish move down), market makers could be suppressing the price to increase their holdings before removing the resistance and driving the market upwards (but still within the bearish structure).
What does this mean about my updated targets/supports? Be prepared for both. Keep a balanced portfolio and take advantage of whatever happens next (hint: we're right at target 1 and in profit if the buys were averaged throughout the buy zone, this is a good time to rebalance if it hasn't been done already). This will be my last comment about this setup. Either the targets hit first or the stop loss does. I believe it's the former but it's challenging to choose between technical analysis or adapting to the strategy of market makers.