Bearish Trade, Cycle Options but some Bullish Signs

BITMEX:XBTUSD   Bitcoin / US Dollar Perpetual Inverse Swap Contract
I needed to make a new post. I really haven't been in much of a trade other than I took a quick ETHBTC long. I've scalped a few other trades, but I'm looking to re-establish my short position. I'm still looking for bearish results, but certainly open to bullish movement.

Right now we have a good risk reward to take a short position with a close area to put a stop. Keep in mind I've been short on and off since $13300, took profit and shorted every rally to some degree. I just took profits and I'm looking to re-establish my short position.

We are basically at the top the range where we've traded for a month outside of the spike and dump. We are also at the 21 EMA . It got rejected yesterday so now that we are back near it, we are going to find out if there are any EMA traders still selling it and whether there are enough buyers to push through $6600, close and turn it into support.

So I have a short at 6550 and will add at $6600. I have an emergency stop at $6700. The only danger of such a tight stop is that we can always get a big move up to clear stops. If we get something like that I'll look to re-establish the short, especially if we had a 4 hour close below $6550 after any spike. If we get over $6600 and hold there for an hourly close I'll get out of the trade.

If I get stopped out I'll go back to just watching for another area to short, potentially back to the downtrend line. I'll have to see price action to make the next short entry. If we close over $7000 I'm not as likely to short and would rather wait for bearish signs.

What I'm looking for in Cycles

I'm looking for a daily cycle low at the end of the month and weekly cycle low that makes a new. I've been looking for this all summer and I may not get it. If I don't get it here in the next few weeks, then I won't be in a good position to buy so I will go into range trading mode.

I don't believe we'll see a strong bull market even if we make a move here back above $7400. If we don't' make new lows here soon, I think the most likely scenario would be that June was a weekly cycle low and we range trade between $6000 and $8000 for many months that chops of both bulls and bears. This is a scenario that no one is talking about but in bear markets its common to make this ski slope move down then just run sideways for months where the bollinger bands tighten up before breaking bullish .

The last option is that we get If we get a nice bull run. From this point I will not have a bullish swing trade. I've explained before that I'm just not comfortable buying soft slow low volume bottoms. I would need to see a new high above $8500 and a right translated bullish cycle. If we get that type of price action then I'll be looking for a dip at a daily cycle low in December.
Sep 16

I'm bearish, but its important to understand that you can be wrong and when bearish, we need to know when we should reconsider. Its especially important in this case because being stubborn can get costly.

I believe we are going to turn down soon validating a bearish left translated cycle and it will be a big move. But since we are just tightening into the end of a big triangle, it can break to the upside. And any break has potential be a strong trending move. So if we start seeing strong impulsive moves up (hopefully with volume) then that would be a sign that the market has ran out of sellers and big money accumulated this range. Then breaking up here late in the cycle and making a new high would give us 3 big signs.

1. A daily swing high
2. A right translated cycle
3. A break of the triangle

I would look for a backtest and buy it at the next daily cycle low. Though I'd still be a bit cautious about calling it the long term bottom. I'd want to be in a position in case we made a big move and broke $8500 as that would give us a weekly swing low and $10k would break an important range.

For now, bearish. Closing 1H over $6600 and I'm cautious. Over $6700 and I want to see price action before I make another trade. I don't want to blindly short all the way to $7400 if I'm not seeing bearish validation.
Sep 19

I got lucky here. Have been too busy to trade. I had a short, but took profits on half of it. Since I couldn't watch it I took another 20% this morning. I had a stop for the rest at $6500 but since I had taken profit I moved it up and barely avoided getting hit on that crazy handle.

Generally speaking I do not like like this price action so I have closed my position here at $6400. If we get back down to $6100 I will not be afraid to open a large position short. We just hit that huge demand block at $6100 so any big buyers are now gone, but getting this much buying without big money taking it lower tells me that smart money is not ready to dump it right now. Possibly too many shorts here.

We are in no mans land being day 36 it could be a really short cycle low or we could get more movement and then get a cycle low in 3-4 weeks, possibly closer to day 60. This price action and current range brings me too much uncertainty and I see relative strength in many alts.

Cycles are sideways with no clarity. In this case, I step aside. Take my profit and wait. I'd rather sell a breakdown or look for a short much higher. I may even scalp some longs if I like the setup.

The thing that bothers me is I've seen this big triangle with numerous failed rallies and on some occasions, you get one last big rally before it goes down and makes new lows. Otherwise it can go into a long sideways range between $6000 and $8000 and stay there for 6-12 months. So at this point, either I'll sell at high prices or wait for the breakdown then enter the trend down.
Sep 21

So far with alts and bitcoin, the price action is bullish which leads me to believe we could very well have a big rally here. I don't believe its going to be a new bull market, but I'm not going to short it. There really isn't a great resistance area above that I like.

If smart money wants to take it higher, they pull all the sell orders and it will run hard with no pullbacks. I will actually buy breakouts and generally look to scalp long.
Sep 21

Triangles in bear markets that occur after a big move up are always tricky and cycles become very murky and hard to trade.

I was looking for some examples and while this isn't exactly, its generally a similar market structure. AMZN had a big move up then went into a bear market for over a year. It was testing that $30-$35 range many times but finally ran out of sellers, had a strong rally made a higher high, then higher low, then higher high then failed and came down to make a bear market low before going back into a strong bull.

This is my fear with bitcoin. That we may have just run out sellers and so we'll have a big rally that potentially gets over $8500 and then fails next year. It would line up with my original thought that we would see a low this summer. Unfortunately if this is the case, we really didn't get a clear low, but a number of tests of the low range between $5500-$6500.

This type of price action is the worst.
Sep 27

Not much happening, so no reason to update.

Markets trend up, markets trend down, markets go sideways. We have been in a sideways market now for a long time. Between $6k and $8500 for 4 months. Between $6k and $7500 for 2 months and most of it right here between $6k and $6500.

Cycles don't help us much on sideways ranging markets. We are in the timing band for a cycle low, So even though I'm medium term bearish I'm hesitant to take a big short position due to the fact we could easily just have a flash lower before we pump. I might scalp a short because I don't think support is strong enough at $6000 to hold us up but I'm still concerned that the market is due for one more pump before we go down.

To simplify. I just don't have a clear enough picture yet to take a swing trade. So I'll play short term trades until I get better signs.
Sep 30

Generally I expected for us to make a low in September. What we got was a low in June then a rally then a double bottom that formed in the first week in September. Though it wasn't technically a lower low in the grand scheme of things it was $100 from the low. And we never got this big move down I was looking for.

This current cycle has gone sideways. I believe this entire cycle is just a big triangle.

We have to remember that we had a big strong impulsive move down. If that was a failed cycle it should have flagged then made another impulse down. Instead we have have grinded for 24 days. Its taking way too long to be a bear flag.

Timing is important to my analysis and it doesn't fit. I think there is a good chance that we are going to go bullish. We might get a quick flush down but I think its more likely we rally here. I haven't been trading much but I'm going long here though I'll be fairly cautious and want to see us move up t$6800 then break out, which I'll buy. And I want to see a high volume confirmation if I'm going to hold it.
Oct 02
Comment: The short term price action is not bullish. Rounding over now so I closed the long. I'm still going to be cautious and won't get too bearish until we see a 4 hour close below $6200. I think it
So are we looking at a coin flip when we get to the end of this triangle? Seems like everyone is watching and waiting. A coordinated buy or sell effort in the next couple days could really swing the price a LOT in either direction, IMO.
rzmb44 pantalons
@pantalons, When we break out I expect a trend. I'm really not sure what direction. The biggest problem with going lower now is time. We've been bearish for a long long time. And so usually its tough to trade like this and then see a big move down. If it happens, its more likely we go down, find a daily cycle low. Then start a small bullish trend and retest $6000. If that sets up correctly, it will be a really nice short. As once we break down and stay lower for at least 34-5 days, it will be hard to get back over $6k.

The other thing to look for is a super quick move to new lows that gets bought up aggressively. We absolutely can go lower and create a long wick. You run out of sellers and eat up that liquidity at $5000-5500. That could fuel a huge rally and I would buy any reversal in that event. This is why I don't want to short from here. I'd rather see the market prove it and short a retest when the set up is perfect. Even if I miss some of it.

The last scenario is that we find a low here and then break over $6800 and I would start scaling in and try to ride that trend long. If we get that price action, then we will likely go straight to $8500 with very few pullpacks. That would also tell you its a bull trap we can short going into 2019.

No matter what happens, I'm still convinced that we need to go lower. whether its next week or in 2019. I expect much lower prices unless we get over $10k then I'll get bullish. Hope that makes sense.
rzmb44 rzmb44
@rzmb44, I meant 4-5 days. If we break down it needs to stay down there otherwise big risk of a flush down that reverses.
Also, what kind of timeframe are you talking about when you see the bullish trend possibly beginning? Still looking for the big move down (eg. the AMZN move you mentioned, even) later or are you thinking that we just aren't going to get it? I've been trying to imagine how, with all the institutional movement toward crypto and the generally bullish long-term sentiment of late, the price would be able to get much further below $5K, if that, even. It just seems like less of a possibility, the more I read about advances the coins are making and the way big players are positioning themselves in the space.
Thanks for your thoughts, as always.
So why wouldn't we expect a drop this week sometime, to coincide with the previous cycle high "pivot" of Sept 4? I'm just not understand the logic; wouldn't it make sense to see something happen at end of this week? Another (possibly higher) low? July high of July 23rd, Sept high of Sept 4, then we see a high in the middle of November. That's what I'm seeing that would rhyme with the previous patterns...
rzmb44 pantalons
@pantalons, What bothers me most is that we had a really strong impulse so if it was going to break down you would have expected it to flag and not take 24 days. So we are in a position where this can be accumulation and with a totally sideways range, there is no guarantee we get a drop even at the end of the cycle. Cycles really work extremely well in trending market because you are getting traders pushing in direction, then profit taking then resumption of trend. So that timing allows you to buy during profit taking and multiply your earnings. When you spend 3-4 months going sideways, there isn't really a need for profit taking so the cycle low can be the end of triangle. This is similar to how an elliot wave counts the end of the triangle as the low for pulling fibs.

Maybe the easiest way to put it is this. With sideways markets we have no clear trend so anything can happen. And the longer you go sideways without a breakdown the more chance it has to break up. No matter what direction we go, its very likely to start trending. At the same time, I don't believe it will be the end of the bear market. I believe if we go up, we'll set another huge bull trap then we'll start going down and make new lows in 2019.
Oh man that AMZN chart is giving me the heebie jeebies. Doh.
rzmb44 pantalons
@pantalons, me too. I'd rather see us fall and get it over with. There is always a chance that we start a new bull market, but I don't think so. We had 3 big days and already crypto twitter is filled with hundreds of people all "loading up" on alts and bitcoin because the bear market is finally over. It hasn't been painful enough. People are still too eager to jump in which means they can let the market go up and then reset shorts again.

One way or another, we are getting to the edge of this triangle. Haven't broke it yet, but whatever direction it goes it likely will trend for awhile so I wouldn't fight it.
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