The one week chart is the Golden Key to understanding Bitcoin's price movement. At this time, Bitcoin is under a zone of resistance, as can be seen on the left side of the chart. This resistance began forming the Week of February 15th and continues to this very moment. As far as Nison candlestick trading strategy goes, look to MA 3/12. Observe on the chart that price has always followed the direction of the Golden/Dead Cross, and that the market is now at an inflection point. When looked at from a Weekly perspective, waiting to trade these setups can be very profitable for the patient, and allows for one entry and one exit weeks/months apart at great profit. The market now forms a Doji, as defined by Steve Nison in his Strict Candlestick Criteria:
Basic Criteria:
- Open and close the same (or within a few cents or pips)
- Market trending up or down
- Also called a cross
- Doji in a rally called a Northern Doji
- Doji in a decline called Southern Doji
- "A time to wait without a position in the market"
Pattern Psychology:
- For a sustainable rally market has to be "pushed up" - a Doji shows the bullish momentum has now been curbed. The bulls now become concerned with this lack of sustained strength.
- Markets can sink of their own weight (i.e. don't need sellers to pull markets lower- lack of buyers will do that) a Doji hints buyers are now starting to absorb supply.
- The market is at a delicate turning period and could go either way.
The Daily chart shows price within the PB&J short Sweetspot between MA 10 & EMA 30, after a Dead Cross. The PB&J trading strategy is to short on bearish reversal signals within the Sweetspot. The most recent candlestick pattern formed by the close of the prior two candles was a Bearish Engulfing Pattern. This sets horizontal resistance at the high of the pattern: $59,239.19 (INDEX:BTCUSD).
On the 4H chart I have drawn what appears to me a Bullish Pennant. Please correct me if I'm mistaken as I have not studied chart patterns and I may have this completely wrong. The upper resistance line is significant, while the lower support line shows the more short term bullish effort. Here is where a trading plan can begin to form on a lower time frame basis to potentially indicate the most profitable entry point. Now, if this is indeed a Bullish Pennant, price MUST break out on higher volume to sustain the breakout. My hypothesis thus becomes: Bulls WILL attempt a breakout of the high of the pattern. IF the breakout occurs on higher volume, a long position can be considered. Do beware however, again, the price is under a zone of resistance. That resistance only becomes support after a breakout and pullback test for support which finds buyers. As such, do consider that this is a high risk entry and the conservative thing to do would be to wait for buyers at these levels to assume all of the risk. Their success or failure can be exploited to the long and short side most easily. A few quotes as food for thought:
"The market is a device for transferring money from the impatient to the patient" - Warren Buffett.
“The average man doesn’t wish to be told that it is a bull or a bear market. What he desires is to be told specifically which particular stock to
buy or sell. He wants to get something for nothing. He does not wish to work. He doesn’t even wish to have to think.” - Jesse Livermore
"The main purpose of the market is to make fools of as many men as possible." - Bernard Baruch
"The stock market is never obvious. It is designed to fool most of the people, most of the time." - Jesse Livermore.
Finally, zooming into the 1H chart I can see that the Bullish Pennant has formed an area of consolidation under increasingly lower volume. Let's see what happens on the closing candles after a breakout attempt. Will the breakout occur at high volume? What will the candles show? Will we see large upper shadows showing sellers overcoming buyer's efforts? My plan will be to wait for the expected breakout and exploit foolish traders at what may well be the high of this move. I will set my Stop Loss above the high of the bearish candlestick reversal pattern, and trail my stop down with an interest in not getting stopped out as prices continue to plummet over the days and weeks to come. If however buyers do break out of the pennant at high volume, I will wait for the sellers to bring price back to test the zone of resistance for support, and if it proves to have sufficient buyers, that will confirm the Change of Polarity (COP) - old resistance becoming new support. This is my trading plan. Good luck and good fortune!
Basic Criteria:
- Open and close the same (or within a few cents or pips)
- Market trending up or down
- Also called a cross
- Doji in a rally called a Northern Doji
- Doji in a decline called Southern Doji
- "A time to wait without a position in the market"
Pattern Psychology:
- For a sustainable rally market has to be "pushed up" - a Doji shows the bullish momentum has now been curbed. The bulls now become concerned with this lack of sustained strength.
- Markets can sink of their own weight (i.e. don't need sellers to pull markets lower- lack of buyers will do that) a Doji hints buyers are now starting to absorb supply.
- The market is at a delicate turning period and could go either way.
The Daily chart shows price within the PB&J short Sweetspot between MA 10 & EMA 30, after a Dead Cross. The PB&J trading strategy is to short on bearish reversal signals within the Sweetspot. The most recent candlestick pattern formed by the close of the prior two candles was a Bearish Engulfing Pattern. This sets horizontal resistance at the high of the pattern: $59,239.19 (INDEX:BTCUSD).
On the 4H chart I have drawn what appears to me a Bullish Pennant. Please correct me if I'm mistaken as I have not studied chart patterns and I may have this completely wrong. The upper resistance line is significant, while the lower support line shows the more short term bullish effort. Here is where a trading plan can begin to form on a lower time frame basis to potentially indicate the most profitable entry point. Now, if this is indeed a Bullish Pennant, price MUST break out on higher volume to sustain the breakout. My hypothesis thus becomes: Bulls WILL attempt a breakout of the high of the pattern. IF the breakout occurs on higher volume, a long position can be considered. Do beware however, again, the price is under a zone of resistance. That resistance only becomes support after a breakout and pullback test for support which finds buyers. As such, do consider that this is a high risk entry and the conservative thing to do would be to wait for buyers at these levels to assume all of the risk. Their success or failure can be exploited to the long and short side most easily. A few quotes as food for thought:
"The market is a device for transferring money from the impatient to the patient" - Warren Buffett.
“The average man doesn’t wish to be told that it is a bull or a bear market. What he desires is to be told specifically which particular stock to
buy or sell. He wants to get something for nothing. He does not wish to work. He doesn’t even wish to have to think.” - Jesse Livermore
"The main purpose of the market is to make fools of as many men as possible." - Bernard Baruch
"The stock market is never obvious. It is designed to fool most of the people, most of the time." - Jesse Livermore.
Finally, zooming into the 1H chart I can see that the Bullish Pennant has formed an area of consolidation under increasingly lower volume. Let's see what happens on the closing candles after a breakout attempt. Will the breakout occur at high volume? What will the candles show? Will we see large upper shadows showing sellers overcoming buyer's efforts? My plan will be to wait for the expected breakout and exploit foolish traders at what may well be the high of this move. I will set my Stop Loss above the high of the bearish candlestick reversal pattern, and trail my stop down with an interest in not getting stopped out as prices continue to plummet over the days and weeks to come. If however buyers do break out of the pennant at high volume, I will wait for the sellers to bring price back to test the zone of resistance for support, and if it proves to have sufficient buyers, that will confirm the Change of Polarity (COP) - old resistance becoming new support. This is my trading plan. Good luck and good fortune!
Comment:
4H Bullish Divergence at Bollinger Band low with oversold RSI, Stochastics, and CCI. Potential bullish attempt here.
Comment:
There are observable similarities to the current situation and the previous bullish cycle ending at the 5.618 Fibonacci Extension.
1) 5.618: Resistance.
2) Reversal attempt at 1.618 with bullish candlestick patterns, Bullish Engulfing Pattern and Piercing Pattern, respectively.
3) 1.618 support failed leading to breakdown and close below iFish MAMA (close in 2 days).
4) Test of iFish Mama resistance (close in 2 days).
5) Breakdown to 2.618 target: $32,013.92
Strategy: Short at test of iFish MAMA resistance: $50,408.01
1) 5.618: Resistance.
2) Reversal attempt at 1.618 with bullish candlestick patterns, Bullish Engulfing Pattern and Piercing Pattern, respectively.
3) 1.618 support failed leading to breakdown and close below iFish MAMA (close in 2 days).
4) Test of iFish Mama resistance (close in 2 days).
5) Breakdown to 2.618 target: $32,013.92
Strategy: Short at test of iFish MAMA resistance: $50,408.01
Comment:
Bearish Engulfing on 30m. Might fall significantly now.
Comment:
I'm short.
Comment:
Actually, I'm long. Look, BTC closed ABOVE MAMA, unlike in the previous short scenario.