Bitcoin Daily Update (day 249)

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 / position: “A clean breakthrough would come on high volume and then would have little trouble supporting a throwback which would create another higher low.” / Short USDT:USD from 0.968 with order at 0.97 to cover
Patterns: Attempting to break out of 6 month bear trend | 1h had beautiful bull flag that broke down
Horizontal support and resistance: S: $6,453 | R: $6,493
BTCUSDSHORTS: Current candle is on a 9. Shorts are primed to pick up
Funding Rates: Longs pay shorts 0.0668% confirming that longs are overleveraged
Short term trend (3 day MA): Above longer term MA’s but price is crossing back below. Close below = bearish
Medium term trend (8 day MA): Crossing 34 and angling up with price on top = bullish
Long term trend ( 34 day MA): Still angled down slightly with price on top = neutral
Overall trend: Neutral, could easily flip in either direction
Volume: Yesteday’s volume was less than half of what I was watching for to consider this move real.
FIB’s: Using Oct 15th candle) 0.382 = $6,559 | 0.5 = $6,483 | 0.618 = $6,405
Candlestick analysis: Shooting star from todays candle with wick = body | Dark cloud cover already forming on current candle, strong indication of fake breakout
Ichimoku Cloud: Today’s candle briefly broke into daily cloud and quickly wicked down. Inside 12h and 4h clouds indicates no trade zone.
TD’ Sequential: 12h g8 and Daily g7 indicates that this move is exhausting
Visible Range: Looking back to last November the high volume node is 2X all other nodes and sits at $6,154 - $6,789. If the price closes above $6,789 at any point then that would be very bullish . Breaking down below $6,154 would be very bearish (hopefully didn’t need VPVR to tell you that)
Price action: 24h: -0.69% | 2w: +0.74% | 1m: -1.62%
Bollinger Bands: Finally tested the top band. Sticking close to the top band would indicate an upcoming trend, pulling back sharply with dark cloud cover indicates a likely return to the MA
Trendline: Broke through trendline but there are strong indications of a fakeout / bull trap from volume, the bearish wick on today’s candle and the dark cloud cover on the current candle.
Daily Trend: Chop
Fractals: Broke up fractal at $6,488 but is quickly pulling back below
RSI: Will daily be able to create another higher low? Bear div on 4h
Stochastic: Daily is overbought and posturing for a sell signal. Sell signal on 12h preceded current pullback

Summary: In yesterday’s post I briefly outlined what to look for if we rally through the bear trend line to confirm that the move is real: “large volume and a supported throwback which creates a higher low”

I wish I would have outlined what to look for to indicate a fakeout / bull trap because we would be checking off every box today.

Volume barely exceeding the moving average and not even exceeding the high from the prior two weeks is a very strong indication of a fakeout. (In hindsight) I would consider the 2014-2015 bear market coming to an end on November 2nd 2015. Take a look at the volume that supported that move combined with the volume that preceded it.

Bear markets end on low volatility and high volume. That is not an either/or proposition. The demand needs to far exceed the supply at a certain price for a reversal to occur, or else it is highly likely that the prior trend will continue.

Outside of volume (most important to me) there are numerous indicators signaling overbought conditions and/or signs of a reversal:

The wick on top of today’s candle may or may not be considered a shooting star depending on the exchange (is wick > / = body?), either way that is a bearish wick/candle and reeks of a fakeout. That was quickly confirmed by the current candle retracing 100% of yesterday’s move.

The 1h chart was forming a beautiful bull flag, however that recently broke down and that is a bearish signal.

The BTCUSDSHORTS’ are at historical support and on a TD 9. This strongly indicates to me that selling pressure will pick up in the next couple days. The funding rates provide confirmation with longs paying shorts 0.0668%.

The daily TD’ Sequential is on a green 7 and the 12h hit is green 8. Both are strong indications that the trend is becoming exhausted.

The daily and 12h Stochastics confirm. 12h just had a sell signal and the daily is postured to crossover in the next day or two.

Yesterday I said that it was anyone’s guess where the price would go today. Now it looks like the bears are taking over and everything I’m looking at points to a reversal within the next two days. Nevertheless I still think it is too early to enter. I will be closely watching the short and medium term trends to be in my favor before re entering a short.

If we fall back below the bear trendline then it will be time to start entering.