Hello it's Mattress Mike with a view on the next few days;
Now hindsight is 20/20 and we all make mistakes, the important thing is to learn from this. This is an important consideration when reading adive of the many armchair experts calling for sub $3k on the basis that they have been correct so far. But herein lays the problem that everyone is correct until proven wrong, there is difference between correctly identifying that we are in a downtrend from identifying when it will end. But I will say that anyone who says they are certain Bitcoin is going to move as they claim, often because they have a paid subscription service and are so brilliant at trading that they really need you to give them money right now, should be treated with a healthy amount of scepticism, some scenarios are more likely than others but at this point in time a compelling argument can be made for both the bulls and the bears depending what angle you look at it.
So firstly I realise that my posts recently have been very speculative, but this is the situation we are in at the moment where we can only use ifs and buts, I feel very strongly towards staying neutral and trading the opportunities in front of you so here is the current situation in my own opinion;
We have a few interesting things today;
Bitcoin longs in a bearish ascending wedge shown above, we have broken out but I am not convinced this will last;
Meanwhile we have Bitcoin shorts in a descending wedge which looks at risk of breaking down, although again I am not convinced that this is more than a shakeout and we will see it break upwards.
So on the face of this it seems clear that Bitcoin is going to bite the dirt, right? Well it's not quite that clear cut. First we need to be aware that the masses short the bottom, we see it time and time again today is no different. Therefore a final parabolic rise of shorts is to be expected. The second and more important point I want to make is the current condition of the daily view of Shorts;
Here we can see a more bearish picture where we have a failed break and is looking to close on a shooting star candle confirmation, suggesting shorts are running out of steam.
The above leads me to conclude that we are near at least a local bottom but that we will see one last strong capitulation first, in part my reasoning is a combination of the strong demand zone we are entering as well as the condition of shorts overall, another failure of breaking the green trend line on the chart below will trigger a lot of late shorts and this combined with the daily bearish view makes me think that timing wise it will be a Monday reversal.
This is of course only conjecture without confirmation, but I don't buy the narrative that we are going to simply drop like a rock as the volume tells a different story. Despite the negative price action volume is unimpressive which tells of course that buyers have yet to step to the plate in force, but also shows an interesting picture of when the big players left the market and are waiting for the right time to re-enter. Whether this will be a large bounce or simply a resistance test is impossible to say right now, due to the trend we have to lean towards it not being, but making early assumptions would be foolish at this point in time.
We have strong support at around $5,500 and again at $5,300 so my eyes will be there to see what kind of reaction we get should breakdown further today.
Now hindsight is 20/20 and we all make mistakes, the important thing is to learn from this. This is an important consideration when reading adive of the many armchair experts calling for sub $3k on the basis that they have been correct so far. But herein lays the problem that everyone is correct until proven wrong, there is difference between correctly identifying that we are in a downtrend from identifying when it will end. But I will say that anyone who says they are certain Bitcoin is going to move as they claim, often because they have a paid subscription service and are so brilliant at trading that they really need you to give them money right now, should be treated with a healthy amount of scepticism, some scenarios are more likely than others but at this point in time a compelling argument can be made for both the bulls and the bears depending what angle you look at it.
So firstly I realise that my posts recently have been very speculative, but this is the situation we are in at the moment where we can only use ifs and buts, I feel very strongly towards staying neutral and trading the opportunities in front of you so here is the current situation in my own opinion;
We have a few interesting things today;
Bitcoin longs in a bearish ascending wedge shown above, we have broken out but I am not convinced this will last;
Meanwhile we have Bitcoin shorts in a descending wedge which looks at risk of breaking down, although again I am not convinced that this is more than a shakeout and we will see it break upwards.
So on the face of this it seems clear that Bitcoin is going to bite the dirt, right? Well it's not quite that clear cut. First we need to be aware that the masses short the bottom, we see it time and time again today is no different. Therefore a final parabolic rise of shorts is to be expected. The second and more important point I want to make is the current condition of the daily view of Shorts;
Here we can see a more bearish picture where we have a failed break and is looking to close on a shooting star candle confirmation, suggesting shorts are running out of steam.
The above leads me to conclude that we are near at least a local bottom but that we will see one last strong capitulation first, in part my reasoning is a combination of the strong demand zone we are entering as well as the condition of shorts overall, another failure of breaking the green trend line on the chart below will trigger a lot of late shorts and this combined with the daily bearish view makes me think that timing wise it will be a Monday reversal.
This is of course only conjecture without confirmation, but I don't buy the narrative that we are going to simply drop like a rock as the volume tells a different story. Despite the negative price action volume is unimpressive which tells of course that buyers have yet to step to the plate in force, but also shows an interesting picture of when the big players left the market and are waiting for the right time to re-enter. Whether this will be a large bounce or simply a resistance test is impossible to say right now, due to the trend we have to lean towards it not being, but making early assumptions would be foolish at this point in time.
We have strong support at around $5,500 and again at $5,300 so my eyes will be there to see what kind of reaction we get should breakdown further today.
Comment:
I just wanted to share my best case scenario for the coming days, I stress that this is the best case scenario in my mind and we need a number of confirmations before it becomes more than that
Comment:
I forgot to note that in this scenario we could be about to see a bounce up to $6,250 ish before getting rejected and sent back down to form the right shoulder
Trade active:
OK so that was a nice rejection of $6,250 and we are overbought now on every time frame all the way up to the 4 hour.
Now we have to see how Bitcoin reacts to the $6,150 support level. It would be better if we didn't bounce here as we need to come down to get a nice rune at breaking $6,250.
I repositioned the trendline by a tiny amount just to neaten things up and so now you can see how this all comes together;
Now we have to see how Bitcoin reacts to the $6,150 support level. It would be better if we didn't bounce here as we need to come down to get a nice rune at breaking $6,250.
I repositioned the trendline by a tiny amount just to neaten things up and so now you can see how this all comes together;
Comment:
My only caution here is that this inverted H&S has been a textbook easy guess so far, that always makes me uneasy because Bitcoin shouldn't be easy!
Do not be catching any knives today as an alternative scenario can see us having a double bottom in the $5,700 area, especially since when/ if we fall under $6,000 I'm anticipating a few panic sells to trigger who bought in yesterday and don't want losses erased completely.
Do not be catching any knives today as an alternative scenario can see us having a double bottom in the $5,700 area, especially since when/ if we fall under $6,000 I'm anticipating a few panic sells to trigger who bought in yesterday and don't want losses erased completely.
Comment:
Ah Bitcoin you are fustrating, this move was the worst of both worlds.
What we needed was a good retrace followed by a strong response in volume, instead we've made a U turn and a sickly rally to the resistance, the suspicious part of me says this was to squeeze out the last of the shorts before making a turn downwards to re-test support and squeeze the longs.
What we needed was a good retrace followed by a strong response in volume, instead we've made a U turn and a sickly rally to the resistance, the suspicious part of me says this was to squeeze out the last of the shorts before making a turn downwards to re-test support and squeeze the longs.
Comment:
This a difficult crossroads because at the end of the day Bitcoin could be pumped a little further if the big players choose so.
But there is only one way a situation like this should go in theory
But there is only one way a situation like this should go in theory
Comment:
A couple of intresting things to note at this moment;
As highlighted earlier shorts have broken down and found support for now
Longs however are looking quite precarious indeed, I have seen many new ideas stating that this is the start of a new run in the next few hours but the stoch is completely overbought on the 4,3 & 2 hours. I am struggling to see this happening when we now have 2 minor and one major resistance hovering above our heads?
Right now my thoughts are is that we need to search for a solid support and this is likely to be found around $6,160 so we shall see how the next few hours develop. If we can cool off the indicators without moving down then I will be feeling a lot more optimistic about this rally, but for now I am not
As highlighted earlier shorts have broken down and found support for now
Longs however are looking quite precarious indeed, I have seen many new ideas stating that this is the start of a new run in the next few hours but the stoch is completely overbought on the 4,3 & 2 hours. I am struggling to see this happening when we now have 2 minor and one major resistance hovering above our heads?
Right now my thoughts are is that we need to search for a solid support and this is likely to be found around $6,160 so we shall see how the next few hours develop. If we can cool off the indicators without moving down then I will be feeling a lot more optimistic about this rally, but for now I am not
Comment:
Pardon the lack of posts for anyone reading, i've been rather pre-occupied with house hunting lately.
I just want to post a rather stark warning about this rally! Probably best to do this in points rather than posting different charts;
-We have broken nothing. Our downdtrend is still intact as shown as the pink line below, see how we have followed a clear squence of testing our inner downtrend line and then outer in succession.
-We have a bearish gartley formed, yes I realise point B - D is out by the smallest of margin from the 1.272 textbook but this can be adjusted to make this and when we're talking about such a small differnce I won't waste my time fiddling about.
-Please pay very close attention to the yellow line, if we cannot break £6,500 then I am quite sure we will be going down hard, trend lines like these can be far more important than they first appear which is my reason for such a busy chart.
Zoomed in:
Zoomed out:
Of course if we make a higher high then this will be invalid (I will be glad if it is!). But this entire move makes to much sense to me, for a start Longs were too built up before this move and I struggle to believe the majority was right about this move. But we also saw a very similar move in April where tested the trend first before breaking out for real a couple of days later.
I just want to post a rather stark warning about this rally! Probably best to do this in points rather than posting different charts;
-We have broken nothing. Our downdtrend is still intact as shown as the pink line below, see how we have followed a clear squence of testing our inner downtrend line and then outer in succession.
-We have a bearish gartley formed, yes I realise point B - D is out by the smallest of margin from the 1.272 textbook but this can be adjusted to make this and when we're talking about such a small differnce I won't waste my time fiddling about.
-Please pay very close attention to the yellow line, if we cannot break £6,500 then I am quite sure we will be going down hard, trend lines like these can be far more important than they first appear which is my reason for such a busy chart.
Zoomed in:
Zoomed out:
Of course if we make a higher high then this will be invalid (I will be glad if it is!). But this entire move makes to much sense to me, for a start Longs were too built up before this move and I struggle to believe the majority was right about this move. But we also saw a very similar move in April where tested the trend first before breaking out for real a couple of days later.
So we had a nice break upwards and now we find ourselves in a difficult situation, I'm still seeing hesitation in the market and we stalled before we reached resistance at $6,300 BUT we did manage to break $6,150 and are currently hovering in range around this resistance. This all makes me feel very conflicted about what happens next, I have developed with trust issues with Bitcoin.
Firstly I mentioned above how there's a number of ways to approach this situation, for example we can view Bitcoin longs in this way;
- Broke upwards from the small ascending triangle
- Appear to still be in the early-ish stages of an ascending wedge
- Is within a larger ascending triangle
So this could fit the following narrative very nicely;
- We are going to continue upwards for a short time perhaps until the 4th, 5th of July.
- There will be a large drop
- This will break out into a bull run
Indeed we can view the shorts chart in such a way that supports this timeline;
But at the same time I need to stress that we CAN view it in this way, there's more than one way to look at things and a re-test of support before any of this happens cannot be ruled out.
So let's take a look at today;
We have just had a failed break upwards from a descending triangle which we can expect of course to break downwards. The question here however is whether this is a failure of the whole breakout or if we are simply printing the right shoulder of an inverted H&S pattern. I am very unsure of this at the moment.
If we look at some indicators we can see that we look quite shaky on lower time frames with a real lack of momentum. High time frames are not a lot better, looking oversold on the 4 hour with a flat RSI suggested short term exhaustion, whilst it's too soon draw much meaningful from the daily.
Right now I am considering a short from $6,170 and close at the first sign of a bounce, alternatively if we can make a strong break of $6,300 I will likely to be going long, however I am very hesitant to trade anything but a confirmed breakout in the current market conditions so will most likely sit on the sidelines until I am comfortable with all aspects of a trade. Corrections are no more than games of patience, rush in and you will lose more often than you will win.