This is a journal of thoughts and analysis on Bitcoin following the weekly close on May 19th
I have positions in Bitcoin, Ethereum Classic (posted), XLM, CND, and DGB
Margin positions currently open TRX (posted), XRP, and BTC Sept futures Long from 6810 (posted as part of BTC short trade thread).
Weekly: Main Chart
The weekly closed at exactly the same level as the high from July nearly 1 year ago. PA touched the highest volume area above 6800 (box) and was rejected. Some retrace is inevitable, but I do not see this event as a turning point. You will see below, the daily closes have created a well defined and playable range between two high interest areas. A common breakout technique is to stop into a long position when the high of the previous week is breached and place a stop following your own risk management. This strategy preserve profit by having the practitioner exit into cash at the weekly close and only risk 2-6% of their account value on the stop at the breach of weekly highs. Large accounts ($1million+ in BTC) are not generally able to follow this strategy though due to liquidity and slippage, without using leverage.
Weekly has been printing nothing but new highs with increasingly large candles on growing volume. Exceptionally bullish overall.
The last week which saw a close lower than the open had a low of 4965, but I do not believe that the price will return to that level anytime soon, if ever. That price is now below the weekly value level marked by the EMAs you see on the chart. During bull markets price will return to the EMA levels of the weekly and 3D creating the best buying opportunities, but stops entering the value zone when the move turns parabolic.
Flips of the Weekly EMAs are uncommon and not to be dismissed. In Bitcoin's 10 year history there have only been 5 (using my settings) including the most recent. And only 1 of the 5 thus far reversed at a price level that would have caused a loss (2014: $575 Bullish Cross - $475 Bearish Cross.) And yet still if one had followed just that signal they could have avoided a 74% draw down following the bearish cross in 2014. See long term EMA view:
We need weekly candle that closes lower than its open soon, to give traders a higher low for bias and trend. A break of 7k though and certainly of the the lows created by last weeks sell off event is not bullish and I would be in-cash below those wick lows on your exchange of choice.
Mex has a high of about 8400 and the wick low at about 6380 on the Perpetual swap contract.
A breakout above the 8400 to 8500 resistance level will precede a rally to at least 9600.
Looking forward on the weekly:
Most bullish is a new Higher Low weekly close, where the open in higher than the close, above 7300.
Bullish - Weekly close above 6467
Indicators do not suggest any bearish turning point, though they are highly over extended and do suggest that a pullback is imminent. Overall I believe BTC develops a large range (rational below) while oscillators cool down and price prepares to move up again.
3 Day:
Shows a similar picture to the Weekly. There is a tighter range (box) within the weekly S/D zone which also shows the price rejection from the weekly.
Closing price resistance is at the same level from a year ago on the 3D as the weekly - about 8219 on Mex. That level and the S/D area around it from Weekly and 3D are very important areas. Which is why a break above the recent highs at 8400, or certainly the 8500 level is likely to lead to a blow off top before any significant retrace and may even turn into support itself after.
The EMA zone on the 3Day is a bit more useful for swing trading than the weekly, which is more for major trend changes within the market. Bids in within the 3D EMA zone have a high probability of filling during bullish retraces during a bullish trend on the weekly and vice versa.
Trend is bullish, PA and MA based biases are bullish. No significant sell signals on indicators. Volatility = High
1 Day:
Daily is still very bullish, but here we do have some bearish noise, and while bulls have dominated the market almost full time since February of this year, Bears are starting to show increased effort at the current range while the daily shows that the market has gone flat (is developing a range).
What I love about the daily chart right now is how price has started to range with clean closes formed by both weekly and daily levels, which are similar to each other going back as far as July of last year (see chart progression in this post). The daily range is obvious and very playable with a low between 7300 and 7000 and a high between 8150 and 8500. And a closing range between 7250 and 8220.
Daily shows some bearish noise with divergences on multiple indicators though only a small/false Div on the MacD. I expect the range to continue for some time while indicators cool down, EMAs catch up, and the market accumulates or distribute for the next move. Play both sides for maximum profit, but be ready to take a loss on one side when the range finally breaks.
As we are back into the top of this range, as of posting, I am looking for an opportunity to hedge my position with a low risk (ideal entry only, tight stop) short term short position.
Will update if I take any new major positions, or the range breaks.
I have positions in Bitcoin, Ethereum Classic (posted), XLM, CND, and DGB
Margin positions currently open TRX (posted), XRP, and BTC Sept futures Long from 6810 (posted as part of BTC short trade thread).
Weekly: Main Chart
The weekly closed at exactly the same level as the high from July nearly 1 year ago. PA touched the highest volume area above 6800 (box) and was rejected. Some retrace is inevitable, but I do not see this event as a turning point. You will see below, the daily closes have created a well defined and playable range between two high interest areas. A common breakout technique is to stop into a long position when the high of the previous week is breached and place a stop following your own risk management. This strategy preserve profit by having the practitioner exit into cash at the weekly close and only risk 2-6% of their account value on the stop at the breach of weekly highs. Large accounts ($1million+ in BTC) are not generally able to follow this strategy though due to liquidity and slippage, without using leverage.
Weekly has been printing nothing but new highs with increasingly large candles on growing volume. Exceptionally bullish overall.
The last week which saw a close lower than the open had a low of 4965, but I do not believe that the price will return to that level anytime soon, if ever. That price is now below the weekly value level marked by the EMAs you see on the chart. During bull markets price will return to the EMA levels of the weekly and 3D creating the best buying opportunities, but stops entering the value zone when the move turns parabolic.
Flips of the Weekly EMAs are uncommon and not to be dismissed. In Bitcoin's 10 year history there have only been 5 (using my settings) including the most recent. And only 1 of the 5 thus far reversed at a price level that would have caused a loss (2014: $575 Bullish Cross - $475 Bearish Cross.) And yet still if one had followed just that signal they could have avoided a 74% draw down following the bearish cross in 2014. See long term EMA view:
We need weekly candle that closes lower than its open soon, to give traders a higher low for bias and trend. A break of 7k though and certainly of the the lows created by last weeks sell off event is not bullish and I would be in-cash below those wick lows on your exchange of choice.
Mex has a high of about 8400 and the wick low at about 6380 on the Perpetual swap contract.
A breakout above the 8400 to 8500 resistance level will precede a rally to at least 9600.
Looking forward on the weekly:
Most bullish is a new Higher Low weekly close, where the open in higher than the close, above 7300.
Bullish - Weekly close above 6467
Indicators do not suggest any bearish turning point, though they are highly over extended and do suggest that a pullback is imminent. Overall I believe BTC develops a large range (rational below) while oscillators cool down and price prepares to move up again.
3 Day:
Shows a similar picture to the Weekly. There is a tighter range (box) within the weekly S/D zone which also shows the price rejection from the weekly.
Closing price resistance is at the same level from a year ago on the 3D as the weekly - about 8219 on Mex. That level and the S/D area around it from Weekly and 3D are very important areas. Which is why a break above the recent highs at 8400, or certainly the 8500 level is likely to lead to a blow off top before any significant retrace and may even turn into support itself after.
The EMA zone on the 3Day is a bit more useful for swing trading than the weekly, which is more for major trend changes within the market. Bids in within the 3D EMA zone have a high probability of filling during bullish retraces during a bullish trend on the weekly and vice versa.
Trend is bullish, PA and MA based biases are bullish. No significant sell signals on indicators. Volatility = High
1 Day:
Daily is still very bullish, but here we do have some bearish noise, and while bulls have dominated the market almost full time since February of this year, Bears are starting to show increased effort at the current range while the daily shows that the market has gone flat (is developing a range).
What I love about the daily chart right now is how price has started to range with clean closes formed by both weekly and daily levels, which are similar to each other going back as far as July of last year (see chart progression in this post). The daily range is obvious and very playable with a low between 7300 and 7000 and a high between 8150 and 8500. And a closing range between 7250 and 8220.
Daily shows some bearish noise with divergences on multiple indicators though only a small/false Div on the MacD. I expect the range to continue for some time while indicators cool down, EMAs catch up, and the market accumulates or distribute for the next move. Play both sides for maximum profit, but be ready to take a loss on one side when the range finally breaks.
As we are back into the top of this range, as of posting, I am looking for an opportunity to hedge my position with a low risk (ideal entry only, tight stop) short term short position.
Will update if I take any new major positions, or the range breaks.
Comment:
True Bearish divergence now exists on the the daily time frame across multiple indicators.
We are in a strong bullish trend, but I think the top is in for the moment and we can expect a slow retrace back to value, or a quick sell off back to value and then continued movement upward. I do not expect price to breach its high from May 30th. I am shorting all moves up so long as that top remains unchallenged. Expecting a retrace to at least 7900, but a test of the 7k is possible with wicks into the mid to high 6k region.
Short avg entry 8664
target 7100
Time frame 2-4 weeks
6200-6300 would be a full retrace hitting the weekly high value zone for bullish continuation (these types of retraces happened regularly during the 2017 bull run)
No real signs on the weekly to expect anything other than pullback/retrace on daily time frame.
We are in a strong bullish trend, but I think the top is in for the moment and we can expect a slow retrace back to value, or a quick sell off back to value and then continued movement upward. I do not expect price to breach its high from May 30th. I am shorting all moves up so long as that top remains unchallenged. Expecting a retrace to at least 7900, but a test of the 7k is possible with wicks into the mid to high 6k region.
Short avg entry 8664
target 7100
Time frame 2-4 weeks
6200-6300 would be a full retrace hitting the weekly high value zone for bullish continuation (these types of retraces happened regularly during the 2017 bull run)
No real signs on the weekly to expect anything other than pullback/retrace on daily time frame.
These are my own thoughts and trades. This is not financial advice and I am not your financial advisor. All material, ideas, and content is provided for educational purposes only.