Bitcoin has had a sideways cycle which makes it difficult to get a sense of timing. At the same time, we are the timing bad for a daily cycle low.
Normally I wouldn't short near a daily cycle low but this is the rare circumstance where I will do it for a short term trade because the risk reward is good enough and if we fall through like i expect, then we could see a capitulation move for a high % gain. In other words, we could get a cycle low in 3-7 days well under $5k.
I think last week was the time for bulls to make their move. I thought we had a good chance to see a rally. I took a long but covered when I saw weakness. Bulls need to reverse this candle today and get back over $6450. A quick recovery would be bullish. I don't expect that to happen, but it's something to look for at close today.
We are in a confirmed down trend with 4 failed rallies making lower highs. Forming a huge descending right triangle and tested $6k way too many times.
Every red circle is an area where bulls defended $6000 and every time bulls defend that area, they use up some of their capital. Every time they bought this area they rallied and every rally got weaker. And the last few times that occurred in the last 6 weeks, the most the bulls could muster was a very weak $700 rally. So at this point its more likely that we break to new lows in coming days. Especially if we get a low close today and follow through tomorrow.
The only other bullish possibility besides a reversal in the next 48 hours is big money goes for the liquidity under $5500 and then reverses quickly. We'd get a big wick on a daily and good buy volume. Because of this scenario, I'll be covering my short as we go down and trailing my stop. The way bitcoin is trading, its smart to expect the unexpected.
If this is going to be a big move down that lasts for months, then I would expect us to find a low in the next 3-10 days then come back and retest $6000 breakdown. So I'm looking for several closes below $6000 and then a bear flag move back up to the test $6000 on low volume. That would be the sign to take a long term short for the next cycle.
Normally I wouldn't short near a daily cycle low but this is the rare circumstance where I will do it for a short term trade because the risk reward is good enough and if we fall through like i expect, then we could see a capitulation move for a high % gain. In other words, we could get a cycle low in 3-7 days well under $5k.
I think last week was the time for bulls to make their move. I thought we had a good chance to see a rally. I took a long but covered when I saw weakness. Bulls need to reverse this candle today and get back over $6450. A quick recovery would be bullish. I don't expect that to happen, but it's something to look for at close today.
We are in a confirmed down trend with 4 failed rallies making lower highs. Forming a huge descending right triangle and tested $6k way too many times.
Every red circle is an area where bulls defended $6000 and every time bulls defend that area, they use up some of their capital. Every time they bought this area they rallied and every rally got weaker. And the last few times that occurred in the last 6 weeks, the most the bulls could muster was a very weak $700 rally. So at this point its more likely that we break to new lows in coming days. Especially if we get a low close today and follow through tomorrow.
The only other bullish possibility besides a reversal in the next 48 hours is big money goes for the liquidity under $5500 and then reverses quickly. We'd get a big wick on a daily and good buy volume. Because of this scenario, I'll be covering my short as we go down and trailing my stop. The way bitcoin is trading, its smart to expect the unexpected.
If this is going to be a big move down that lasts for months, then I would expect us to find a low in the next 3-10 days then come back and retest $6000 breakdown. So I'm looking for several closes below $6000 and then a bear flag move back up to the test $6000 on low volume. That would be the sign to take a long term short for the next cycle.
Comment:
As I stated I have not been trading and I thought bitcoin would eventually go below $6k. I only made a few trades from mid Sep to mid October and no trades at all the last 30 days. Was waiting for direction. Now we have it. I did not trade this move down even though I was leaning bearish.
Bitcoin should start trending. There are 2 possibilities. The first and most likely is that we head down and make a cycle low in December. The more days we stay under $6k, the more likely this happens. I'll be looking for a sideways or bear flag move to short from here.
A daily close over $6100 with a big wick gets really interesting. This is not likely to happen. I give it maybe a 15% chance. This needs to happen quick. We can't stay under $6k for days or investors are going to just start bailing. The only way this is possible is if this move down was orchestrated by big money in order to get liquidity so they can try to ignite a rally.
So I'll be patient and wait for some sideways action and start building a short if we get a bit higher. If we just crash without a bear flag I'll wait for signs of a bottom and try to long it for a trade. I'll make a new post if that happens.
Bitcoin should start trending. There are 2 possibilities. The first and most likely is that we head down and make a cycle low in December. The more days we stay under $6k, the more likely this happens. I'll be looking for a sideways or bear flag move to short from here.
A daily close over $6100 with a big wick gets really interesting. This is not likely to happen. I give it maybe a 15% chance. This needs to happen quick. We can't stay under $6k for days or investors are going to just start bailing. The only way this is possible is if this move down was orchestrated by big money in order to get liquidity so they can try to ignite a rally.
So I'll be patient and wait for some sideways action and start building a short if we get a bit higher. If we just crash without a bear flag I'll wait for signs of a bottom and try to long it for a trade. I'll make a new post if that happens.
Comment:
www.tradingview.com/chart/1wQp7Zjq/
We got the cross between the green and red. The fact that the daily cycle topped on day 1 was a bad sign. I was expecting a retest of $6k but that didn't happen and we have capituation.
Do the volatility, I believe we are in a timing band for a daily cycle low that will come slight early. Its day 40 now, so I think we could bottom any day but I would guess it comes in 5-12 days.
So if we get a big wick high volume candle I will buy it and buy pullbacks. Otherwise if we flag here for a few days I'll look for one more drop next week and I'll buy. I will also start buying back my core holdings that I sold above $13000. This will be a long term hold. I'll buy back roughly 50% and wait for either a move back above $6200 or weekly cycle low to average in lower, which would be some time next spring.
We got the cross between the green and red. The fact that the daily cycle topped on day 1 was a bad sign. I was expecting a retest of $6k but that didn't happen and we have capituation.
Do the volatility, I believe we are in a timing band for a daily cycle low that will come slight early. Its day 40 now, so I think we could bottom any day but I would guess it comes in 5-12 days.
So if we get a big wick high volume candle I will buy it and buy pullbacks. Otherwise if we flag here for a few days I'll look for one more drop next week and I'll buy. I will also start buying back my core holdings that I sold above $13000. This will be a long term hold. I'll buy back roughly 50% and wait for either a move back above $6200 or weekly cycle low to average in lower, which would be some time next spring.
Comment:
This is my best guess at the cycle count, but its important for me to stress that this type of price action is where cycle theory is weak. No indicator works 100% of the time and much of cycle theory is predicated on timing and profit taking. When markets aren't trending, there is no profit to take, so I simply don't put much emphasis on cycle counts. Too easy to be wrong.
I still don't feel I have an advantage, so I haven't traded. Part of the reason I don't update often. It can easily be accumulation for a move up or smart money is just stacking sell orders because they know bitcoin will get trapped under $6k.
I believe bitcoin will eventually move below $6k. I just don't know if we will have a little bullish move here first. If we hit the daily cycle low last week and day 3 was the top, then things will get terrible and if we close a few days below $6k, I think we'll have 40+ days of downside and a big downtrending market.
But if we get a good volume bullish daily candle that holds its gains, I would expect us to go retest $8k before coming back down. So I'll hold off until I feel I have an advantage.