Bitcoin Daily Update (day 265)

I believe that it is possible to beat the market through a consistent and unemotional approach. This is primarily achieved through preparing instead of reacting. Click here to learn more about how I use the indicators below and Click here to get my complete trading strategy! Please be advised that I swing trade and will often hold onto a position for > 1 month. What you do with your $ is your business, what I do with my $ is my business.

My recent Bitcoin Bubble Comparison - 3 Day Chart led to the following calls: < $5,750 by 11/15/2018 & my prediction for the bottom is $2,718 by 1/20/19 | My Bitcoin Bubble Comparison - Monthly Chart closely mirrored my price and time targets | Calling for $35 ETH before the end of 2018.


Previous analysis: I then exited my long at a nominal loss and opened a short at a much worse price. May seem like bad trading but it actually brings up some important topics
that I haven’t talked enough about: position sizing, risk:reward and hedging.
Position: Short ETHBTC from 0.03109 | Short LTCBTC from 0.00752 | Short EOS:BTC from 0.0008057 | Short BCHBTC from 0.04628


Patterns: Bear pennant / flag
Horizontal support and resistance: R: $4,371 | S: $4,200
BTCUSDSHORTS: Pulling into golden cross, expecting a hard bounce around 26,200
Funding Rates: Longs pay shorts 0.01%
Short term trend (4 day MA): Currently being tested
Medium term trend (9 day MA): Was very surprised when we appeared to be breaking down before retesting 9 MA. Now it looks like we should.
Long term trend ( 34 day MA): Rolling over and will be in line with resistance cluster at > $5,750
Overall trend: Bear
Volume: nothing noteworthy that I am seeing
FIB’s: (Start at $1,000 and connect to ATH’) 0.886 = $3,164 | 0.786 = $5,805
Candlestick analysis: I cannot ever remember seeing a 4 candle sequence like we have over the past four days. High volume hammer, following by a bullish spinning top (very high liklihood of leading to a bounce) and then a bearish inside bar and a breakdown of horizontal support that didn’t retest the bottom of the wick from the original hammer. A lot of words to draw no conclusions, however the pattern recognition part of my brain finds it very interesting.
Ichimoku Cloud: 1h cloud is thick from $4,400 - $4,850.
TD’ Sequential: Red 8 (most important indicator to me right now)
Visible Range: If we breakdown $4,000 then there should be significant support at $3,750. If we breakdown that area then I would expect a fall to $3,100
Price action: 24h: +3.07% | 2w: -32.29% | 1m: -32.77%
Bollinger Bands: Closed inside daily band
Trendline: 4h bear trendline is at $4,760, however the 33 MA is at $4,588 (was recently above trendline). Parabolic SAR’s are also moving in more tightly at $4,500 (When SAR’s get inside my MA’s then I view them as more likely to get broken)
Daily Trend: (Using 1h 33 MA to identify daily trend) Bearish
Fractals: Down: $4,000 | Up: $5,692
RSI: Rekt
Stochastic: Daily stoch looks bearish af’ with the recross + divergence

Summary: The most important indicator to me right now is the TD’ Sequential being on a red 8. Failure to breakdown $4,000 horizontal support after breaking down the 4h bear pennant shows many signs of a trap.

Furthermore I was really expecting a retest of the 8 day MA before selling off further. Now it is looking like the price action from yesterday whipsawed me out of my long and into a short at exactly the wrong time.

However that is okay. When you markets are moving you have to act fast. Sometimes you get whipsawed. Each position I took had a > 5:1 risk:reward ratio. Furthermore each position had a much greater than 20% chance of success (based on my subjective estimation).

I ended up adjusting my stop loss to $128.5 right before it would have triggered due to shorter TF’s before very overbought at resistance. This is something that I am extremely weary of, however it is a small position and as I gain experience I like adding small dashes of discretion.

I re calculated the risk and adjusting the stop had acceptable implications on my risk:reward considerations.

There are a lot of bullish indicators right now, however the bear pennant / flag is still in tact and there is a lot of bearish momentum. When all things appear equal it is usually a very good idea to bet on the trend / momentum. This post is market as a short but would not suggest opening a short unless we get another close below the bear pennant / flag.