Don't Do It! You Are Wrong - Key Levels to Watch Out For

I guess you are about to witness many traders saying that the bull market is over or the bulls have just begun. I think it is too soon to say any of these and that's why whatever the direction is that you are positioning yourself, you are possibly wrong. I am not saying your trade will be a loser but what I am saying is that each direction seems improbable but not impossible. It's a bit messy. These are the times that hurt my equity the most. We are at the extreme of a trade-channel and price broke above the whole channel but went back in. Issue with being close to channel extremes is that these are the times when the market generates too many false signals. Check the image below. You can clearly see the false break-down of the black trend- line which also happens to be the bottom extreme of the same trade-channel, indicated with a black circle at the bottom. Since all the trend-lines within the ascending/colored trade channel have been broken, all these lines lost their legitimacy/credibility but not entirely. This is the main reason of the false signals. There are too many possibilities at this point and there are 3 major questions that we cannot entirely answer.

1) Is BTC going for new highs? (Maybe)
It may/should make new highs since we broke above the current trade-channel by which breaking through 12,000. The reason that I don't believe it is a good idea to think that it is about to make new highs in near future is that it is hard to position a long trade at this point mostly because stop-loss placement would be too further away. Right now, it just dropped down below 11,400. In near future, this drop may extend further down to 11,050-11,150 range. I am considering to put on a long position from both these price levels. Target price is 11,500-11,600 range. Any long position should be kept in short-term because there is the possibility that the bull market might be over or this is the beginning of a retracement.

2) Is it over? (Maybe)
Price is at the intersection point of 2 crucial trade-channels. Price level on its highest point is another crucial level that is the Daily & Weekly & Monthly resistance points. Price got rejected from both. If the last 12,300 top was indeed a false break-out, it might be just over. However, unless price goes below 10,000 again, bulls are in control. If price breaks below 11,000 and fails to shoot back above 11,000, that's alarming but a neutral bearish signal.

3) Is this a retracement? (Most probably)
In a week of green candles it is hard to deny that the market is dominantly bullish. It doesn't matter that much if we couldn't remain above 12,000 or price just had a $1000 retracement. I am saying that again, unless price goes below 10,000 again, bulls are in control. So, it is too early to say that the bull market is over and this is probably a retracement before attempting to go above 12,000 again.

In overal:

Most possibly we are in a retracement phase and whatever the position you take (long/short), it is safer to keep the trade open not for too long and keep it as intraday trade. Any long term trade at this point may hurt too much if the bull market is over or if price shoots back up. I prefer to use RSI to seek for any exhaustion on retracement phases, 1h and 15m RSIs and 5m-RSI to pick the exact point to enter the trade.

Possible trade opportunities:

Short Idea: Golden line is now a resistance again. If the price attempts to go above this line again and fails, 11,700 levels provide a fine entry for a short position. I am also expecting the price to make a quick attempt to break above 12,000-12,050 range with low volume. Volume is the key indicator for this level. I'd like to see the volume bar to be lower than the 4H volume bars since 5th of August. If things reveal itself the way I think, around 12,000 will be my second entry for the short.

Long Idea:

As I mentioned, in retracement phases, RSI becomes extremely useful to pick entry points. Top grey line is above 11,150, mid-grey line is above 11,050 and bottom grey line is just above 10,900 and finally cherry trend-line indicates 10,750 range. I prefer to pick the latter 2 for long entries. Some from 10,900 and the remaining from 10,750 (with a 50-50% volume distribution on each order). Stop-loss is around 10,675. Target price may extend up to the golden line, 11,700 however this may change depending on the market's behavior by the time. If the RSI signals some exhaustion/bullish divergence around the other grey lines, I may enter a long position. If I do, I will keep the post updated.

At the time being, it is hard to determine where the retracement ends but my most possible guess for now is the blue line that is the mid-level of the descending/blue trade channel, around 10,400. But before it does reach to this range, I think there is going to be a prior bounce ($500-600 bounce) from one of the price levels mentioned in the long idea.

Good luck on your trades!

Comment:

As I keep on looking at the chart, 10,880 starts to seem as the most possible stop for the current retracement.

Trade active:

Golden line seems to be doing its job as a resistance. I had a short entry at 11690. But I have some adjustments for the stop-loss, it is around 11,670 now. For the target price 11,000-11,200 looks fine but if I see that the price is just plummeting, I may consider to move the target down to 10,800-10,900 but I don't think it will fall below more than that. As I mentioned in the post, if the stop-loss is triggered, I will look for another short entry around 12,000-12,050.

Comment:

Stop-loss is moved to 11,580. If it's triggered, we are still 10% profitable on this one.

Trade closed: stop reached:

Trade has been closed at 11,580. Price is probably going for another attempt to break above the golden t-line, 11,700, and I think it will be broken above. I am waiting until the price reaches back to 12,000-12,050 range before doing anything.