Hello dear community!
It took a time to bring few important details together. If you look on my previous charts and posts, they combined few ideas of Wyckoff method, Dow theory and chart patterns.
I remember the middle of January when Bigdog published an idea of BTC short and that we not only gonna see it reaches 15k again but we will see also lows of 1k. Last weeks i have been studying a lot of different materials about market cycles, accumulation and distribution phases and different chart patterns. Here is an idea that i came with combining this knowledge. Of course its only a theory so dont take it as something that definitely will happen and of course not very fast. Market cycles are the processes taking a long time to develop and bring a particular market instrument to the target. From January we have seen a squeeze in the price range and different traps to keep the momentum going and giving needed time to develop some phases.
So what we have here on the chart BTCUSD:
Our accumulation phase that started in May 2017 and continued until August 2017. The price range was pretty stable channel 2000$ - 2800$ followed by break out in August and throw back in September with china FUD. This throwback went pretty well and reached swing high of the accumulation zone. That moment parabolic move up followed by the re-accumulation period in october around 5800$ and immediate breakout to 7640$ zone, that is our actual support zone also. After the market correction caused by the lightning update cancelation, we went up with little and last re-accumulaton period around 8300 that is our actual resistance and went parabolic to reach ATH at 20000$. Next we saw distribution period that lasted for few weeks and lower peak high with a failed rally and lack of volume. Follow this period we have retraced all the way to our previous re-accumulation zone and had a throwback to 11500$.
Now comes an interesting part, if we will continue going by the Wyckoff method we will see further downwards movement until we reach our previous re-accumulation level around 5800$ zone where we should have a re-distribution. Next movement will be to go back to our accumulation period and to finish a market cycle. In order to complete it we will reach the target of 2000$-2900$ zone and stay there in accumulation zone once again. This way i can see market cycle complete and this long "Crash" coming to an end.
Now to some chart patterns:
I have seen few Head and shoulders pattern charts and when i can see this as a possible scenario. Though i am a little bit concern about the left shoulder form being much smaller than the right shoulder, though in the crazy market like the crypto market is, we rarely see perfect shapes and patterns. What we can see in this chart that is a volume development, we have seen volume decrease during the price fall and volume increase on the right shoulder formation. Now what we want to see is a really strong volume on a break out of the right shoulder. That can be also possible as the end of the right shoulder is our re-distribution zone and big sell off can cause a huge spike in volume. During our move to this zone, it is possible we will see some bearish pattern formation that will cause a further drop to the re-disrtibution zone.
We have a lot of indicators pointing on the bearish continuation of the pattern. Death cross on EMA, MACD cross, TTM squeeze down, and most importantly none of the levels provided us strong bounce. Even our year-long trendline is leaking, supporting for time being but not giving a strong bounce.
Any opinions happy to hear in the comments, and if you see this as reasonable continuation dont forget to put a short position ready ;)
Of course, none of it is financial advice but only for entertainment purposes.
It took a time to bring few important details together. If you look on my previous charts and posts, they combined few ideas of Wyckoff method, Dow theory and chart patterns.
I remember the middle of January when Bigdog published an idea of BTC short and that we not only gonna see it reaches 15k again but we will see also lows of 1k. Last weeks i have been studying a lot of different materials about market cycles, accumulation and distribution phases and different chart patterns. Here is an idea that i came with combining this knowledge. Of course its only a theory so dont take it as something that definitely will happen and of course not very fast. Market cycles are the processes taking a long time to develop and bring a particular market instrument to the target. From January we have seen a squeeze in the price range and different traps to keep the momentum going and giving needed time to develop some phases.
So what we have here on the chart BTCUSD:
Our accumulation phase that started in May 2017 and continued until August 2017. The price range was pretty stable channel 2000$ - 2800$ followed by break out in August and throw back in September with china FUD. This throwback went pretty well and reached swing high of the accumulation zone. That moment parabolic move up followed by the re-accumulation period in october around 5800$ and immediate breakout to 7640$ zone, that is our actual support zone also. After the market correction caused by the lightning update cancelation, we went up with little and last re-accumulaton period around 8300 that is our actual resistance and went parabolic to reach ATH at 20000$. Next we saw distribution period that lasted for few weeks and lower peak high with a failed rally and lack of volume. Follow this period we have retraced all the way to our previous re-accumulation zone and had a throwback to 11500$.
Now comes an interesting part, if we will continue going by the Wyckoff method we will see further downwards movement until we reach our previous re-accumulation level around 5800$ zone where we should have a re-distribution. Next movement will be to go back to our accumulation period and to finish a market cycle. In order to complete it we will reach the target of 2000$-2900$ zone and stay there in accumulation zone once again. This way i can see market cycle complete and this long "Crash" coming to an end.
Now to some chart patterns:
I have seen few Head and shoulders pattern charts and when i can see this as a possible scenario. Though i am a little bit concern about the left shoulder form being much smaller than the right shoulder, though in the crazy market like the crypto market is, we rarely see perfect shapes and patterns. What we can see in this chart that is a volume development, we have seen volume decrease during the price fall and volume increase on the right shoulder formation. Now what we want to see is a really strong volume on a break out of the right shoulder. That can be also possible as the end of the right shoulder is our re-distribution zone and big sell off can cause a huge spike in volume. During our move to this zone, it is possible we will see some bearish pattern formation that will cause a further drop to the re-disrtibution zone.
We have a lot of indicators pointing on the bearish continuation of the pattern. Death cross on EMA, MACD cross, TTM squeeze down, and most importantly none of the levels provided us strong bounce. Even our year-long trendline is leaking, supporting for time being but not giving a strong bounce.
Any opinions happy to hear in the comments, and if you see this as reasonable continuation dont forget to put a short position ready ;)
Of course, none of it is financial advice but only for entertainment purposes.