BitcoinUpdated Convergence of Downward Trend Line with March 24 2017 Trend Line
As the market continues to reflect a bearish trend with the failure of the inverse H&S to break the downward trend line, we're increasingly likely to see a convergence between the 50 day SMA (note I use as "source" the "low" and not the "close" which is arbitrary) and 200 day EMA. Combined with the convergence of two major trendlines we're basically getting the equivalent of a triangle pattern as the market funnels into a decisive moment that has a relatively higher probability of moving things lower given overall macro conditions (negative search trends, low transaction volume).
Google Search Trends have flattened and confirmed daily BTC transactions also appear to have bottomed out in the 150k-200k range, reflecting a 2 year low, which should be encouraging for overall market stability. However, given that we're dealing with unregulated markets with major regulatory risk and huge unknown liabilities stemming all the way back to the Mt. Gox era (2013) it's important to understand that the "market" comes down to a handful of major players that effectively function as a the "central bank" and some implied trust must be accepted that those players won't act in such a way as to harm themselves and the overall market.
If you were following the 50 day SMA for both LTC and BTC you could've recognized (assuming you use "low" as the source in your settings) an opportunity for a bounce around the $9500 level for BTC and $173-$174 level for LTC. Unfortunately, I didn't pull the trigger on that order as I hadn't planned a 50 day SMA trade since there was no sign the market would crater so quickly. I had considered buying the bounce at $10450 last night but felt that a better opportunity would come up sooner. While the 50 day SMA bounce ($9450-$9940 GDAX) would have been a nice play the bigger picture is that the market is moving into a triangle formed by two large trendlines. This should allow fairly predictable price action assuming some external factor doesn't trigger the market unexpectedly.
Generally speaking this applies to both BTC and LTC markets with the LTC trendline starting about 6 days later on March 30, 2017 but also forming a notable triangle with the downward trendline off its ATH.
For BTC this gives us a somewhat "safe" zone for targeting entry between $7500 and $9200 with some observation of how the price moves around the 50 day SMA as well as noting the curve of the 50 day SMA. It's important to note that next ADX trend could be negative and trying to "buy the dip" can work if you manage your position size and leave room for mistakes.
See this Peter Brandt article to get a sense of how critical it is to manage risk while trading downturns:
peterlbrandt.com/trading-drawdown/?utm_content=bufferd3222&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
All this being said, there's no guarantee price will just tank again like before and the 200 day EMA and 50 day SMA could prove to be strong support for a bounce back to the downward trendline so for a slightly higher risk trade (which was why I was hesitant (and already the price has moved back to near my targeted entry level) and a trade that requires much more active monitoring and possibly a tight stop you could enter around the 50 day SMA with some expectation that sufficient momentum exists to push it back into the $10,300 level and with somewhat lower probability the $10,800 to 11k level.
Google Search Trends have flattened and confirmed daily BTC transactions also appear to have bottomed out in the 150k-200k range, reflecting a 2 year low, which should be encouraging for overall market stability. However, given that we're dealing with unregulated markets with major regulatory risk and huge unknown liabilities stemming all the way back to the Mt. Gox era (2013) it's important to understand that the "market" comes down to a handful of major players that effectively function as a the "central bank" and some implied trust must be accepted that those players won't act in such a way as to harm themselves and the overall market.
If you were following the 50 day SMA for both LTC and BTC you could've recognized (assuming you use "low" as the source in your settings) an opportunity for a bounce around the $9500 level for BTC and $173-$174 level for LTC. Unfortunately, I didn't pull the trigger on that order as I hadn't planned a 50 day SMA trade since there was no sign the market would crater so quickly. I had considered buying the bounce at $10450 last night but felt that a better opportunity would come up sooner. While the 50 day SMA bounce ($9450-$9940 GDAX) would have been a nice play the bigger picture is that the market is moving into a triangle formed by two large trendlines. This should allow fairly predictable price action assuming some external factor doesn't trigger the market unexpectedly.
Generally speaking this applies to both BTC and LTC markets with the LTC trendline starting about 6 days later on March 30, 2017 but also forming a notable triangle with the downward trendline off its ATH.
For BTC this gives us a somewhat "safe" zone for targeting entry between $7500 and $9200 with some observation of how the price moves around the 50 day SMA as well as noting the curve of the 50 day SMA. It's important to note that next ADX trend could be negative and trying to "buy the dip" can work if you manage your position size and leave room for mistakes.
See this Peter Brandt article to get a sense of how critical it is to manage risk while trading downturns:
peterlbrandt.com/trading-drawdown/?utm_content=bufferd3222&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
All this being said, there's no guarantee price will just tank again like before and the 200 day EMA and 50 day SMA could prove to be strong support for a bounce back to the downward trendline so for a slightly higher risk trade (which was why I was hesitant (and already the price has moved back to near my targeted entry level) and a trade that requires much more active monitoring and possibly a tight stop you could enter around the 50 day SMA with some expectation that sufficient momentum exists to push it back into the $10,300 level and with somewhat lower probability the $10,800 to 11k level.
Note
I should add that on a "daily" interval the probability of a bounce off the 50 day SMA is relatively low but for a shorter duration that's not out of the question. In a bull market where the 50 day SMA is trending up the probability of seeing a bounce off the 50 day SMA will be fairly high but in a bear market where the price is driving the 50 day SMA lower then you're likely to see the opposite, which is a dip well below the 50 day SMA followed by a return to it.So in terms of risk management, if we're assuming that the market is still pretty bearish then now wouldn't be an optimal entry level if you're looking to enter the market or add to your position.
Much like the previous major dip into the $5900-$7500 area, well below the 50 day SMA, it was fairly obvious that the market would reverse from that zone. At current prices we're basically sitting in the middle of the range from the last year or so at about $9450 (assuming $19900 top and $1000 bottom -- do your own calculations if you want to be precise -- this is a totally ballpark number)
Note
The obvious problem with cryptocurrencies is that unlike buying vintage Porsches or Lambos the market price is fairly arbitrary. At times there's just no ceiling and no floor. You can't look at a book of prices and say, ok, this one sold for this price so I'm going to be safe and offer this price.This SEC statement appears to have spooked the market:
sec.gov/news/public-statement/enforcement-tm-statement-potentially-unlawful-online-platforms-trading
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This basically goes back to the "Systemic Risk" article that I talked about. If the SEC/CFTC cracks down on bad actors in the market, then you really don't know what the "bottom" will be until the shit hits the fan. Technical Analysis won't give you any insight into regulatory risk.I don't think relatively decentralized systems like Bitcoin can really "go to zero" like some speculate because the network of users is large enough that it's completely unlikely that everyone will abandon ship unless some better system comes along (which so far is all vaporware). So if we're looking at the "bottom" of a cataclysmic shock that would likely still be in the $2000-$4000 range given current user levels and that probably would be any market activity at that price would likely not last (i.e. like a flash sale or a flash crash sale) very long.
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Going back to the buying cars analogy the assumption that people make is that a given commodity has a market to buy that commodity and that market will provide enough demand to keep the prices up. So given that the market for used Porsches has grown just like the market for crypto and Bitcoins and given that both have relatively deflationary supply curves you could make the case that both should appreciate any value over time.However, in light of this argument, you should consider that old Porsches has far more deflationary supply because no more are being made and as old Porsches lose value, get destroyed, etc. then Porsches will increase in value more reliably as demand increases.
With Bitcoin you get lost, stolen, and destroyed Bitcoins but overall supply continues to increase at a steady rate and during bull markets inflationary forces such as hard forks and altcoins effectively increase the supply of cryptocurrency markets overall, which defeats the idea that Bitcoin is some magical deflationary commodity system. It's more important to look at the overall market of cryptocurrency users and consider whether the market is bullish or bearish. In a bear market perhaps cryptocurrency users retreat to Bitcoin given the strong network effects but in a bull market perhaps crypto users try to substitute for Bitcoin to get an even better "return".
Note
This part of the SEC Statement seems the most obviously relevant:Considerations for Market Participants Operating Online Trading Platforms
A platform that trades securities and operates as an "exchange," as defined by the federal securities laws, must register as a national securities exchange or operate under an exemption from registration, such as the exemption provided for ATSs under SEC Regulation ATS. An SEC-registered national securities exchange must, among other things, have rules designed to prevent fraudulent and manipulative acts and practices. Additionally, as a self-regulatory organization ("SRO"), an SEC-registered national securities exchange must have rules and procedures governing the discipline of its members and persons associated with its members, and enforce compliance by its members and persons associated with its members with the federal securities laws and the rules of the exchange. Further, a national securities exchange must itself comply with the federal securities laws and must file its rules with the Commission.
An entity seeking to operate as an ATS is also subject to regulatory requirements, including registering with the SEC as a broker-dealer and becoming a member of an SRO. Registration as a broker-dealer subjects the ATS to a host of regulatory requirements, such as the requirement to have reasonable policies and procedures to prevent the misuse of material non-public information, books and records requirements, and financial responsibility rules, including, as applicable, requirements concerning the safeguarding and custody of customer funds and securities. The overlay of SRO membership imposes further regulatory requirements and oversight. An ATS must comply with the federal securities laws and its SRO's rules, and file a Form ATS with the SEC.
Some online trading platforms may not meet the definition of an exchange under the federal securities laws, but directly or indirectly offer trading or other services related to digital assets that are securities. For example, some platforms offer digital wallet services (to hold or store digital assets) or transact in digital assets that are securities. These and other services offered by platforms may trigger other registration requirements under the federal securities laws, including broker-dealer, transfer agent, or clearing agency registration, among other things. In addition, a platform that offers digital assets that are securities may be participating in the unregistered offer and sale of securities if those securities are not registered or exempt from registration.
In advancing the SEC's mission to protect investors, the SEC staff will continue to focus on platforms that offer trading of digital assets and their compliance with the federal securities laws.
Consultation with Securities Counsel and the SEC Staff
We encourage market participants who are employing new technologies to develop trading platforms to consult with legal counsel to aid in their analysis of federal securities law issues and to contact SEC staff, as needed, for assistance in analyzing the application of the federal securities laws.In particular, staff providing assistance on these matters can be reached at FinTech@sec.gov.
Resources for Market Participants
Regulation of Exchanges and Alternative Trading Systems
Select Commission Enforcement Actions
SEC v. Jon E. Montroll and Bitfunder
In re BTC Trading, Corp. and Ethan Burnside.
SEC v. REcoin Group Foundation, LLC et al.
SEC v. PlexCorps et al.
In re Munchee, Inc.
SEC v. AriseBank et al.
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Because it is a warning to platforms to clean up their act because the SEC is watching.And it could be considered a warning to investors to be careful of what platforms they use as they could be subject to regulatory risk in an enforcement action.
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All this being said, I still think overnight trading poses relatively low risk for regulatory bombs though of course even with the China/S. Korea/India FUD mostly out of the way we know that many unscrupulous exchanges remain operating out of Asia so there still exists a fair amount of risk that some regulatory bombshell could harm the market.In order of risk, here are the markets that I find the most exposed:
1) XRP token - Ripple probably has the largest regulatory exposure of any coin due to its centralized nature, the possibility that they are violating multiple laws related to money transmitting, issuing securities, and insider trading (assuming previous assumption is valid). It is not like Bitcoin which can continue to operate with a large regional crackdown. XRP can go to zero (or close to it, i.e. lose 90+% in a day) much like BitConnect should some negative enforcement action be announced. I would absolutely not hold any XRP long given that those trading it are speculating and generally pretty dumb.
2) ICOs/Ethereum/NEO/XLM/ADA/EOS, etc. - FinCEN has just issued a statement that says all ICO issuers are essentially subject to money transmitter laws. Given that this market has already died in America from a regulatory beatdown this might not affect the US too much as it is just extra paperwork and hoops to jump through for legitimate issuers. In any case, if you're an accredited investor then you should be mature enough to DYOR and know your risks.
see here:
bitcoinmagazine.com/articles/fincen-deals-major-regulatory-blow-icos-and-exchanges/
3) Exchange Risk - as I've discussed previously, most exchanges are a huge black hole of liabilities waiting to rear their ugly head. This is more or less a repeat of historical cryptocurrency liabilities (i.e. Mt. Gox, etc.)
This time around we're seeing far more definitive enforcement activities as regulatory bodies have wrapped their heads around what crypto is and what institutions are doing.
Given the very rapid pace of regulatory activity it would certainly seem highly probable that CFTC, SEC, and FinCEN all have very large crypto oriented enforcement agendas in the works. You certainly don't want to be holding the bag when this FUD hits the media.
We all know how easy it is to manipulate prices on the exchanges or gain insider knowledge that allows certain players to profit more easily in the market. This fundamental problem creates an excessive amount of risk for most traders. And this is problematic for the market as a whole since participant growth is necessary for the overall network/market to retain value. If Bitcoin (or whatever crypto) is just an intermediary (like XRP is *supposed* to work) then that doesn't make it particularly desirable as a store of value. At least gold is a physical object that you can use as a door stop or make into jewelry. With crypto you're relying on incentivized collusion in the market to hold up the value...
Note
From that FinCEN article you can gather that some exchanges selling "tokens" have even more risk. Given a mass selling of tokens to move off of those exchanges to reduce exposure this poses a huge risk of contagion in the markets (i.e. a systemic risk). However, if some of those funds move to even less regulated exchanges or exchanges that are perceived to be immune to regulatory risk then this might be ok for prices but perhaps simply concentrates the risks even more into a "black hole" where suddenly funds go missing or whatever...Here is what Bitcoin Magazine wrote in that article linked above:
"If what FinCEN is saying holds merit, anyone who sells tokens to U.S. residents while, at the same time, failing to register with FinCEN as an MSB and failing to perform the know-your-customer (KYC) and anti-money laundering (AML) compliance obligations could also face several years in prison under a felony conviction."
Note
coincenter.org/link/fincen-raises-major-licensing-problem-for-icos-in-new-letter-to-congressAccording to this argument the FinCEN's money transmitter argument likely doesn't make sense as applied to ICOs.
Trade active
Well, the price broke the 200 day EMA as I expected and bounced from between the 300 day WMA and the 200 day EMA around $9017 in GDAX. I had a staggered order from $8900 to $9200 so only part of it executed.Note
I was really hoping the price would bounce back to 11k which would have been a really easy short but it didn't so that order didn't execute.Note
I probably should have just shorted at 10k which is still a valid trade (if this dip reverses) due to the downside risk being about 10% (to <11k or downward trend line) with upside reward being a move to 8k or lower (March 2017 trendline) so better than 2:1 reward:risk.This current rally could be shortlived so exits should be considered in the $9400+ range...
Note
$9200 looks to be a strong support level so there could be some good scalping trades between 9200ish and $9500Note
This is the kind of volatility where money is made ... if you don't give yourself a stomach ulcer staring at 1 minute candles and the order book...Trade closed manually
For LTCUSD (on GDAX) the price hasn't broken below the 50 day SMA (source = low) and given the 200 day EMA actually shows an upward curve there could be a big bounce off the $150-$160 range back towards $175-$180.So 12.5+% move possible here...
LTCBTC has gained today so unless something has fundamentally changed with Litecoin demand this seems like an opportunity. Shorting between $190-$200 seems safe though that might be an overly optimistic entry point.
The 200 day EMA is converging with the March 30 trendline which should provide strong support. If that support doesn't hold then the bottom could really fall out on LTC. The bump in price and volume from the Litecoin Cash fork could reverse rather quickly as price has now moved to pre-Litecoin Cash levels.
Note
This price action off of the $9000 level has been far weaker than I expected. Yesterday's dip tested the 9.5k area several times but this dip has shown a much stronger convergence between support and resistance levels.This seems to suggest we'll be going sideways for a while unless volume picks up again.
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I should restate that given the tight spread between the 50 DMA at about $9550 and the 200 day EMA at about $9100 we're seeing the market sitting right in the middle of this, uncertain about market direction.The other day provided a big FUD trigger so most market participants know that this isn't particularly a great risk:reward buy area and given recent momentum not a lot of sellers have panicked yet. It seems that we need at least a 30% move to really get the volume way up. That would be about $8190 off of the recent $11700 high.
Note
In light of the regulatory FUD the upside is that markets and exchanges will clean up their acts and start to seriously self-regulate in an effort to save themselves from self-destruction.This could prove to be a strong positive for crypto markets, but we might need to wait for the other shoe to fall before going all-in. So far a strong reversal has not been signalled.
Trade closed: stop reached
I wasn't seeing any bounce in this 9k price level so I closed out my positions entered between $8905 and $9100 after the second move back to 9k. Ultimately it was a very low risk:reward trade given that the price is still in the middle of the trading range between the converging downward trendline and March trend line.I'm going to wait for a better opportunity and if the price moves back up it will be a good entry point for a short. I haven't spent much time on exchanges that allow short positions or allow selling of certain currency pairs but in this market it makes sense to take those positions especially as a hedge against mining losses in a downward trending market or to lock in a minimum return for mining.
Note
LTCUSD is trading with more or less an identical chart to BTCUSD on a 15 minute scale which tells you not a whole lot is driving LTC price other than BTC price.Note
I will be surprised if this bounce off $8580 goes anywhere. There's just not much volume trying to get into the market.Note
I could've caught the bounce off ~$8375 (GDAX) and $157.50 (LTC-GDAX) but the price action started right around the time I was going to take a break. After looking at the volume I wasn't sold on this bounce but it ended up being better than the stair step action from 9k.I ended up cancelling a small trade I had set for LTCUSD at $160 because my position size was pretty small so I decided not to even bother since the market was moving so quickly it didn't seem worth the effort to babysit that trade but ultimately that was a mistake since I could've made a decent profit in less than an hour.
The whole point of trading with small staggered intraday position sizes is to minimize risk while ensuring you don't miss out on price action. The trade targets I set were thrown together hastily without notes and had no exit targets so next time I need to stick with my method of planning out every trade in detail. When doing multiple intraday trades in a busy market this has worked well for me in the past but for more general swing trades I've developed lazy habits.
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The other big thing for intraday trades is being in the proper mindset. It helps to have a routine. I found an organic energy soda that I re-order from Amazon and if the market is moving and I have to wake up I'll go through a sequence of drinking soda, scan: coindesk, cointelegraph, and bitcoin magazine on my screens and then scan the charts of the three major pairs...I took a two year break from trading everyday so I'm still trying to figure out best practices for crypto...
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Notably when the order book is thinner in the middle of the night the price bounces a lot more than during the day when there is a lot more volume and you're getting panic selling / frequent stopping out that creates unpredictable order volume.Ultimately, the risk:reward and probability of success is better for swing trades, but I keep looking for intraday opportunities... need to make up my mind here...
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I thought it looked like there would be a battle for this $8500 level but out of nowhere 200+ BTC in volume appears around $8550 in the ask. And then it just disappeared...Note
Given that we've had 4 straight days of big negative bars my feeling is that tomorrow will be relatively quiet and perhaps there will be enough sustained buying to push BTC back to $8900-9k before we get another panic sell weekend as was the case for most of January...My feeling is that a lot of retail buyers are stuck above 11k having expected a breakout. One notable TA person with a lot of followers said the breakout was "inevitable" and kept calling it a "breakout" so I'm doubtful there's enough volume on the sidelines now to get back above 11k in the short term. If we get dropping volume I would expect some bots to try to push those weak hands to dump so a bigger move can form around the 7.5k-8k levels with a push back to at least 9k and possibly 10.5k.
Moving towards the March trendline will require consideration of volume and order books. If the volume is relatively weak and order positioning is relatively weak then a break of the trendline will likely push price towards the 5.5k-6k level which might invalidate an expectation of another wave above the trendline convergence price of ~$8900. Intuitively, if we see dumping through the weekend then I can see the price recovering along the trendline back towards the 50 DMA.
Given the overall bearish mode of the market and the inevitable losses that some will face with ICOs, shitcoins, and exchanges being forced to comply with regulations I think it's probably about 50/50 that this trendline gets broken or sees a breakout to below 7.5k.
The 6k level definitely seems like the "median" price target just based on the GDAX order book and a second touch of that level could help confirm that as a market bottom.
Google search results have stabilized back to fall 2017 levels and transaction volume trends seem to have flattened. Overall, anything between 6k and 7.5k will be a strong buying opportunity.
I've considered a dip back to below 3k as a historically similar move to 2014 as the persistent low support was about 85% below the ATH during that 2014-2015 bear market, but there are several big differences between 2014 and now.
In 2014 the market was completely raw and totally immature with Mt. Gox being a perfect example. Now, we've got regulatory frameworks being developed more fully and institutions adopting blockchain solutions or working actively to scale these developments. In general, I'm skeptical we'll see a bear market like 2014 given some of the positive regulatory signals that I've seen recently.
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Holy shit. In the time that I wrote that last thing the market almost hit 9k!Note
coindesk.com/bears-in-control-but-bitcoin-may-defend-8k-in-short-term/Bitcoin looks set for a drop to $6,860 and could possibly extend losses as low as $6,000, as indicated by the bearish setup on the daily chart.
However, oversold conditions as seen in the 4-hour chart could yield a minor corrective rally in the short-term to $10,000.
Only a daily close (as per UTC) above the 10-day MA (currently seen at $10,527) would signal the sell-off has ended and will likely be followed by a bout of consolidation.
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This was big news today:forbes.com/sites/tedknutson/2018/03/08/cryptocurrency-bubble-burst-unlikely-says-ex-cftc-chair-now-crypto-industry-adviser/
which generally reiterates my feeling that the market is still growing but will probably see a slowdown or flat period where enthusiasm stays flat as regulatory frameworks catch up.
Perhaps due to the timing of this announcement the markets will stay positive going into the weekend. Volume has notably bounced much higher in the Bid which could be manipulated or just whales putting positive price pressure on the market (same thing, right?).
It looks like $8700-$8800 levels might prove to be strong support if the price doesn't take off above 9k BTC / $185 for LTC.
Note
BTC is up over 2% since I wrote the last thing so it looks like we're getting a pretty strong run and this should in theory reverse the prior move if sentiment and volume are sufficiently high.Note
While this sounds somewhat like a conspiracy theory I can see how Steven Mnuchin and Trump's colleagues, being bankers, would pressure them to crack down on ICOs and crypto as a competitive threat.Note
While I think this sentiment bomb might take some time to fully disseminate across all social media I think it's fair to say that this could be a very big positive for reversing the current bearish price action.I've entered a small position around $9200 that I will probably just hold with an expectation that the 50 DMA will stay flat with an increasing probability that we will avoid a death cross in the near term and price will pull back towards this $9200-$9500 range at some point with an exit target of 10k.
investopedia.com/terms/d/deathcross.asp
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I accidentally posted this to the comments where apparently I'm being "moderated" now... this is from the Cointelegraph TA article linked previously above:4-hour chart BTC looks oversold...
History shows bitcoin sees corrective rally after the relative strength index (RSI) shows extreme oversold conditions (well below 30.00).
The sharp recovery from $8,342 (prices as per Bitfinex) to $8,800 in the wake of extreme oversold conditions as shown by the RSI indicates the historical pattern is working and may lift BTC prices in the short-term.
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There's some resistance around $9400 but there is enough buy volume to break through this and overall the order book looks fairly light. I wish I had bought this dip at $9250 but I was in a meeting and missed it. We could see a few more up and down cycles around this price level to thin out the sell side before taking a much bigger run. I expect momentum to pick up as those holding out for a move back to 8k re-enter. While the previous post mentioned RSI I noticed that RSI really didn't show oversold conditions so that's another reason to believe this sentiment shift could lead to a bigger push up over the weekend. Naturally, this could change but it's already after hours so it seems unlikely that any regulatory announcements could affect the current trajectory.Note
I meant to say the ASK looks fairly light.Note
I've increased my positions to include ETH, more BTC at around $9250, and XMR at $284.Note
I don't think anyone in their right mind would short over the weekend when an ex-CFTC chief basicaly says outright that crypto isn't in a bubble.Note
I was really mad at myself for missing the two double dips last night at $8400 because I was just tired and didn't feel like trading but this could be a good run. $9500 is showing strong resistance so that will be a critical level to watch.Note
I suppose $9350 is showing resistance, probably from scalpers. With an expectation of a stronger move it seems pointless to chase these small gains, but I can see scalpers entering and exiting at progressively higher prices helping move the market and create liquidity. $9400 could take a while to push through and my overall positioning is still conservative. Should the market dip back to $9200 I can add more to my position.Note
I feel really stupid now for not letting my order for LTC at $160 fill.Note
It just made no sense why so much volume was lining up to sell just below $9400 when so much volume was clearly pushing the momentum higher. I just saw two orders of over 20 BTC execute at $9380 prior to the bump to $9400.Note
20 BTC each so it was like 43 BTC between those two orders.Note
Volume has picked up slightly across the market so this is a good sign. Momentum building.Note
Significant support is building around the $9300 level. Probably some stragglers who are trying to enter now at $9270-$9280 on a dip so things might go sideways for a while until the $9400-$9500 sell volume gets cleared out or pulls back. I really don't see much resistance below 10k and then 11k will be the big test. In theory the inverse H&S could still break out so if the price gets above the neckline that will be a 20+% swing in both directions in a week.If there is a dip back to $9270-$9300 I would add to my position.
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This is a positive sign which also reflects my feeling that BTC Google Search Trends have bottomed out and could signal a reversal soon.
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cnbc.com/2018/03/09/wall-street-analyst-creates-new-index-that-says-when-to-buy-bitcoin.htmlThe source article citing Tom Lee discussing the "misery index" and past signals.
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I accidentally cancelled an order for BTC at $9280 because I was going to watch the market and try to time it better then realized there was a basketball game I was missing and then of course missed the dip I had tried to catch... though I did add to my XMR position since I didn't cancel that order.Note
I ended up with a slightly better position. Given the resistance around $9500 this could see some profit taking but overall ASK still looks pretty thin.Note
BTC volume has dropped off and the $9250 level did not hold as expected.Note
Probably saw some people stopped out of positions which led to the big dip.Note
What's notable about the current volume is that BTC appears to have taken back significant amounts of marketshare in the overall crypto market based on volume. When you consider that the "market cap" isn't a reliable indicator of value then you can see that Ethereum is now only trading less than 20% of the volume of Bitcoin. Then Litecoin after that has less than 11% of the volume of Bitcoin.This would seem to indicate pretty clearly that altcoins have lost their substitution effects given a downward trending market and Bitcoin is seen as a "safer" bet.
Volume is picking up again and given it's late in most markets except Asia where it is Saturday we could see a lull going into the evening.
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Volume in the market has fallen off again but it's like the resistance at $9400 just disappeared magically....Note
In the grand scheme of things if I made the right call on market direction it doesn't really matter, but I originally set slightly lower PTs for XMR and BTC and I could've hit those if I'd just been slightly more patient.Note
BTCUSD is definitely up over 12% now in the last 24 hours but for some reason cryptocompare only shows it as 7%. Litecoin is also up over 20% but it is being shown at 15%.Note
In retrospect I should've thought more in terms of a series of intraday trades like I've done in the past because I saw there would be strong resistance at $9400-$9500 then I could've taken profit and re-entered with the expectation that there would be sufficient support to move the price back up.It seems like very few human traders are active or maybe a lot of positions were stopped out at $9200 because until $9200 most of the orders were tiny.
It almost seems like some kind of bot that's out of control running arbitrage since GDAX has a higher price than Bitfinex because there seems to be almost no sell volume except at the mid market price and there's nothing even remotely close pressuring people to sell at that level.
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Pretty sure if you did a market order for 30 BTC the price would shoot up by $100 right now.Note
Ok I was wrong. It would have required 86 BTC.Note
So that's like 370 BTC to move the price down $100 and 90 BTC to move it up $100....Note
That arbitrage seems to be gone now so who knows...Note
A market order for 140 BTC would send the price to $9500. To move the price in the opposite direction by that amount you'd need to market sell close to 900 BTC.Note
The problem with thin markets like some of these alts on Kraken is that if you get stopped out the price just tanks, which is great if you're wanting to buy at a lower price. It must suck to wake up to find your position got stopped out if the price went up after that...Note
I wonder if something has changed with these bots because usually when the market gets super thin a bunch of market buys just clobber the price upwards. There's so little volume on the ASK that it's like a line with nothing under it.Note
In retrospect I let my enthusiasm for sentiment change affect my position sizing and target prices.If I'd done some math based on the 200 EMA level of around 9100 as the middle of the trading range and the 50 DMA round 9500 as the top of the trading range I should have more reasonably expected a retrace back to the 61.8% fib level of the move from 8400 to 9500, which happens to be around $8750.
This would have guided me to optimal intraday entries and exits and a more optimal swing entry. I should have taken as a strong sell signal the rapidly falling volume, but I didn't want my trade to execute while I was sleeping and I didn't wake up early enough to exit at my target of $9450.
Overall the market still looks bullish but I'm going to wait for better signals before trading into another rally.
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The last time BTCUSD saw 6 straight negative daily candles was at the very top of the market on Dec. 17, 2017.That dip was followed by a 60% retrace.
At that point RSI was 78, ADX 72 and the market had been signalling oversold for 5 days prior to the start of the dip.
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At this point, RSI has dipped below 40 after coming from 60 so it suggests sideways price action since a strong trend has failed to form either way.The last time we had more than 5 daily negative candles was in March 2014 prior to the December 2017 peak.
So while no reversal has been signaled, it seems extremely unlikely to see 6 negative daily candles given that the last two periods happened 4 years apart.
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If my understanding is correct that closing prices are based on 12:00 UTC then that only leaves about 2 hours to close above the $9200-$9250 level for a positive candle.While it seems unlikely that 6 consecutive negative daily candles could happen in such a short time span this could signal a bear market.
While I was optimistic that Tom Lee's misery index was signalling a sentiment shift, the massive drop off in volume seems to indicate that if that was a "buy" signal it isn't a very accurate one just like RSI can indicate something but only if it is really strong.
So far we haven't seen any strong ADX or RSI figures that would suggest a strong reversal. And the best time to buy on a longer scale duration appears to be when volume has completely dropped off on a historical level though this can't be tested very well since it happens so infrequently.
That being said based on historical probability it seems unlikely that we'll see a negative close tomorrow.
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9k and 8.8k proved to be weak support. 8.5k so far is showing more support than these other levels. The problem is a lot of this volume is clearly put in place with bots and those bots aren't actually trading on that volume based on what they see in the market. So the price level just ends up failing quickly. That being said I've seen very strong support levels take long moves sideways going nowhere so it's valuable to have multiple signals to validate a price target.Note
Peter Brandt provides a lot of good Twitter guidance such as:Many of my best trades in the past 43 years came about when a chart failed to perform as expected. In fact, it is extremely revealing when charts do not produce expected price action.
I never regret taking profits at target prices
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Really algo bots are in many ways a coordinated attack on markets because they recognize opportunities in a way that ordinary people cannot.So even though the order book in one exchange might be completely devoid of activity as long as a bot has the funds to push the market in their preferred direction it doesn't matter what you do on a short term basis. You have to think more long term...
Whatever is happening in Bitcoin markets doesn't seem to apply with Litecoin though. LTC bottomed out around $172 so the sell pressure hasn't been nearly as strong.
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I felt like the positive sentiment shift from the other day could take a few days to spread globally.When you search for "Bitcoin Misery Index" and look at the past day trend it is hitting 100 in South Korea and 100 over the last hour or so, which suggests that this positive sentiment shift could grow.
trends.google.com/trends/explore?date=now 1-d&q=bitcoin misery index
That could be what's driving this $130 spike in the last 5 minutes.
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For the US and Japan it really hasn't had any sustained interest. So we'll see what happens, but this kind of sentiment recirculation often takes time in just the same way that Thanksgiving in the US was a critical time for sentiment to grow.Note
Given the low volume overall this isn't likely to put a dent in the overall trajectory of the market.Note
On the 4 hr chart RSI has touched below 30 three times now and is turning up while ADX has come off a peak of 65. This would suggest a strong probability in the near term there could be a move to the 50% fib level of the move from the recent low around 5900 and the high of 11750. This would be about 4.8% from the current price of $8775.Note
The market is up about $500 in the last hour.Note
On the 4 hr chart the price has moved out of the downward channel of the last 6 negative daily candles. Hitting $9400 would be touching the 50 DMA but resistance should be tougher around $9500. Breaking $9500 would be crossing the neckline of a 4 hr chart double bottom which could prove a strong signal for a push to $10500+ or the lower trendline.Sell target should consider the 4 hr RSI.
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Volume has increased 10+% so we might see some sideways price action if volume doesn't continue to pick up.Trade closed manually
Took profit on my BTCUSD positions and left open ETH, ETC, and XMR as they are lagging. Overall, indicators still look good but market starting to flatten out so it made sense to take some risk off the table.Note
Resistance above $9700 was looking very bearish so I'm going to observe the market (or just leave the computer ... ) for a bit and look for a better buy signal.Note
It seems likely that we'll see price action bounce between $9400 and $9600 for a while.Note
It seems like too many intraday traders have entered the market, which could make it harder to push past this resistance zone. Hopefully we'll see some alts catch up while this sideways price action plays out.Note
The order book must have gotten pretty thin. I stopped paying attention for about 15 minutes and the price took off by $200.Note
Someone just sold 23.45 BTC at $9581Note
As I expected given the historical probability, we didn't get 7 consecutive negative daily candles. Price is more or less moving between the 50 DMA and 200 EMA (source = low) the last few days.Volume is declining. BCH and Dash have seen a slightly higher bump in recent days otherwise all the other major coins are pretty tightly correlated. ETH and ETC seem flatter than the rest.
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Just before 5:30 AM BTCUSD shot up $300 in around 5 minutes. 1 min. It looked a bit like a symmetrical triangle was forming on the 1 hr or 4 hr chart (not looking) but all the other indicators suggested there would be one more dip so I tried to be conservative and plan my trades a bit low and completely missed the move.Note
RSI isn't very useful when the market is unidirectional. Sideways markets can provide a lot of good short duration setups.Note
What's frustrating is the alts are just hanging around with declining volume waiting for BTC to break past 10k. I got rid of my ETH because I just didn't like my downside risk. Now holding ETC, XMR, LTC, BTC.LTC has been strong but faces a lot of resistance to break $200. At this point LTC is probably going to consolidate until BTCUSD breaks 10k. If LTC can breakout above $200 that could suggest a trend reversal as it has been hugging the upper channel trendline.
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A hard bounce off $9755 without dipping below 30 RSI on the 1 min chart...Note
It's so clear why some alts are ridiculously volatile. At least half of the coins in the top ten are too illiquid to trade without huge spreads or a total lack of volume. And even those coins seem to have some bot action at work...Note
It was pretty clear to me yesterday that 10k wasn't geting breached, but I kept my XMR anyway rather than close it out at break even.The current move down seems to have run out of juice and the 78.6% fib retrace level for the current move would bring the price to the upward trendline from the previous dip to around $5900. If this trendline doesn't hold then that would be problematic but so far this seems to just be normal price action.
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Pretty annoyed that I missed my trade by writing that last thing...Note
While I got in at $8950 I missed again at another target by $10...Note
In a market with upward trending expectations it's probably better to just buy a larger quantity rather than worry too much about position size..Note
At this point most people in the market are going to be fairly bullish about crypto and Bitcoin so the speculative mania aspects have receded significantly. Things could move sideways for a while since it's the in-between hours. I was going to say things could drop back below 9k but that seems unlikely at this point. Most of the Asian market will see opportunities up to $9400 and then resistance will start to build. Closing at $9400-$9500 will keep the 50 DMA flat and provide more momentum for continued to increases.Note
Well I guess I was right about the dip back to 9k. Could've made double my profit... Oh well. Sometimes you have to just leave the computer for a bit.Note
I like watching 1 min RSI to get a sense of what's going to happen in the market in the short term but trying to trade it just isn't my idea of fun.Sideways markets can be good if you're magical and you can predict when the market will trade sideways (which sometimes I'm pretty good at predicting) but then when the market skews one direction or the other the RSI becomes less predictive.
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Volume increasing ... think we'll get close to $9500 soon...Note
Seeing some big market sell orders coming through at this price.. probably a mistake cuz you'll just end up buying right back in...Note
5 min RSI suggests a top here but 45 min RSI indicates there's a bit more to go... my last exit showed a fairly strong overbought signal and I still missed the top of the market by 1.7%.Note
Resistance looks like it's going to take a while to break so I decided to bail around $9400.Note
volume still increasing, so still a good sign for breaking $9500 though this might turn into a sideways intraday trade for a while.Note
All the times I've tried to do short duration intraday trades I've just waste a lot of times. Better off leaving that to algo traders...Note
Market orders on GDAX are totally pointless. You might as well do a maker order since the fees eat up so much profit...Note
some strange bot action on the Ask now that looks very spoofy... With BTC futures expiring on Wednesday maybe this is some kind of attempt to control the price. $9200 is now becoming an area of heavy resistance. It wouldn't take much volume to clear $9400 again.Note
There's definitely a spoofer in the Ask trying to get people to hit market sell because in the time that I saw over 50 BTC in the order book near the mid-market price there were almost no orders made.Note
I meant filled.Note
There's something strange going on in the market that's leading to unusual volatility. Probably a good idea to watch this play out because clearly there's some whale using a bot to influence price.Note
It doesn't make sense that the order book is practically empty from $9250 to $9490 but there's all this spoofing of the Ask from mid-market to $100 above the mid-market price.Note
Common sense would dictate pulling back so the price can go up.Note
This market was throwing me off so much I didn't execute the order that I had planned which would have substantially corrected my other position..Note
The problem with entering into a volatile market that hasn't found a bottom is that you'll just end up taking on even more risk. Better to just ride out a bad position and enter when you have a more reliable signal. My problem was that I accidentally doubled my order and entered on a relatively weak signal after telling myself to wait.Note
There must be a bot that sells on other exchanges when it detects significant sell pressure on another exchange. Like a dumping bot...Note
After realizing my dumb mistake I could've exited quickly for a profit but I got stupid/greedy and thought to myself maybe this is better...Note
Volume has dropped off noticeably.Note
If my position size had just been normal like I intended I wouldn't have had so much fear and I would have just traded like normal and made money. Getting gripped with the charts just throws off all of your decision making.Note
So that was a huge waste of time that should have doubled my profits on the day but in the end I guess I learned something.1) Don't place orders if you're sleepy or distracted by someone/something
2) Follow the system of entering positions based on reliable indicators (in this case I wanted a good 5 min RSI oversold signal and went ahead and used something completely different)
3) If you're underwater don't shy away from taking risk. If the logical order size is too much risk then cut it in half.
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If I had followed #3 I would have exited with some profit while only increasing my risk by 50% (as opposed to 100%).Note
This third trip back to 9k in the last day or so has completely wiped out resistance between 9k and $9490. You could market buy 300 BTC to move the price from $9017 to $9450.Note
3 min RSI suggests we're oversold, but 45 min RSI suggests there's a bit more downside possible and sell volume at 9k would discourage buying at this price.Note
Price is hitting the bottom of the recent upward trendline formed last Friday 3/8 around $8900. A sym triangle is clearly forming and a breakout seems possible soon.Note
This could also be a bull trap, which would also see a breakout to the downside. Sell pressure isn't very heavy so this doesn't necessarily make sense.Note
While the order book overall looks flat there has been almost continuous sell pressure near the mid market price for 4 hours now. This suggests some automated strategy coordinated between exchanges.Note
It looks like $8900 could be breached, and if that happens sell volume could pick up considerably as the upward trendline from March 2017 shows $7500 as the lower target.Note
If that support doesn't hold then you could expand the downward channel from 3/5/2018 and project a possible move back towards 6k. This seems unlikely given the various support levels to be crossed in between unless we some big external trigger.A move like that would likely indicate a persistent bear market that would hasten a death cross which would then suggest that prices could move even lower, i.e. < 3k-4k., which have been historical retrace levels 85% below All Time Highs reached in 2014.
This seems like a worst case scenario and therefore relatively low probability.
Order cancelled
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I just recently figured out how to paste charts.Note
It seems just based on order book volume this 9k level should hold. I would wait for a more definitive signal or breakout that indicates the direction of the overall market before entering.Note
It's hard to see this market moving up any time soon due to the huge resistance building around $9300. I expect this range to shift slightly lower although in theory based on charts this mini sym triangle should be moving higher.Note
I should have said below $9300.Note
That being said $9000 shows a lot of support which explains why the market has been yo-yoing so tightly between this range.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.