The Most Likely BTC Paths as of 02/10/18 (there are Only 3)
To be a successful trader or investor, especially in Crypto, you must Be Ready For Anything! Therefore, we must consider all likely paths. The market is currently in a downtrend and until the downtrend stops, we must consider a continuation to the downside and what it might look like. Here are the 3 most likely paths.
The Market:
Path 1. tests back to the Low of 02/06/18 and then makes new highs (without making a lower low)
Path 2. reaches the resistance channel and then tests back to the Low of 02/06/18 and then makes new highs (without making a lower low)
Path 3. reaches the resistance channel and then makes a new low into the most extreme Buy point, which is the intersection of the lower downtrend (red) channel line and the long term (blue) rising trendline from late 2011. The rising trendline must be viewed on a logrithmic chart if you want to see it its entirety. Here's a link to a chart that shows it
If you are bullish on BTC, then the obvious preference is choice #1. If you look at the chart linked just above, you can see visually why there is a good possibility that this low holds. Also, consider than the week ending 2/11 (tomorrow, as of this post) will show the highest weekly volume on BitStamp since early 2011.
But we must be ready for anything, and the current trend is down, so new lows must be considered. If we significantly break the current low, IMHO the market will get sucked down to the extreme point, which is simply the support trendline of the long uptrending channel. That's going to flush out a ton of sellers, leaving no place to go but up. If paths 2 or 3 are taken, there will be an opportunity for a sell against the resistance channel. With Path 2, the sell would have a lower probability of success than with Path 3, simply because Path 2 has already made a testback to the low, and we know there are plenty of reasons that the current low is a strong support point. If Path 3 is taken, you will be able to sell your long position for > $10k and buy back (for the next Bull Run) more than twice and maybe as much as 3 times the #coins you sold. That is huge! These two sell opportunities should be considered whether you are shorting or just exiting your long position.
Of course there are other paths, but the above are the most likely and in any case, their consideration should be a useful part of your analysis. I'll have more updates on this 'idea' as the market decides how it wants to proceed.
The Market:
Path 1. tests back to the Low of 02/06/18 and then makes new highs (without making a lower low)
Path 2. reaches the resistance channel and then tests back to the Low of 02/06/18 and then makes new highs (without making a lower low)
Path 3. reaches the resistance channel and then makes a new low into the most extreme Buy point, which is the intersection of the lower downtrend (red) channel line and the long term (blue) rising trendline from late 2011. The rising trendline must be viewed on a logrithmic chart if you want to see it its entirety. Here's a link to a chart that shows it
If you are bullish on BTC, then the obvious preference is choice #1. If you look at the chart linked just above, you can see visually why there is a good possibility that this low holds. Also, consider than the week ending 2/11 (tomorrow, as of this post) will show the highest weekly volume on BitStamp since early 2011.
But we must be ready for anything, and the current trend is down, so new lows must be considered. If we significantly break the current low, IMHO the market will get sucked down to the extreme point, which is simply the support trendline of the long uptrending channel. That's going to flush out a ton of sellers, leaving no place to go but up. If paths 2 or 3 are taken, there will be an opportunity for a sell against the resistance channel. With Path 2, the sell would have a lower probability of success than with Path 3, simply because Path 2 has already made a testback to the low, and we know there are plenty of reasons that the current low is a strong support point. If Path 3 is taken, you will be able to sell your long position for > $10k and buy back (for the next Bull Run) more than twice and maybe as much as 3 times the #coins you sold. That is huge! These two sell opportunities should be considered whether you are shorting or just exiting your long position.
Of course there are other paths, but the above are the most likely and in any case, their consideration should be a useful part of your analysis. I'll have more updates on this 'idea' as the market decides how it wants to proceed.
Comment:
The market has now taken out to the high side the weekly doji bar at the recent low of 5920.72. The following chart indicates the significance of the doji bar and the accompanying volume. On prior occurrences you can see that new highs were always made. Will new highs be made from here? Probably, but we still have not had a testback to the low and one may be coming from the upper channel resistane line, which is currently in the 12,600 area.