Bitcoin H&S? Don't think so, consolidation going on
Updated
I pulled out my long term chart from Feb again to zoom out a bit and see what probably going on now. After the Bitfinex drop last week the market fought off the bearish sentiment like it was nothing, even like nothing is going on even. What seemed to be a catalyst for a big dump, a few hours later after the dump it was getting clear the market was not that impressed by that bad news. As the hours were passing by i talked about that i was surprised to see how strong the market was holding up after that bad news. Problem with news in crypto is, you can never know if it's true or if it's complete. To my understandings now the deal at the moment is:
That some governments have confiscated some funds from Bitfinex (the 850 mil) for a while now. Because Bitfinex wanted to continue business as usual, for their clients to notice nothing and being able to withdraw funds when they wanted, Bitfinex loaned money from Tether because of those seized funds. Assuming those funds will return to Bitfinex eventually and when that happens they would return the funds Tether lend to them. So this is the reason why Tether also only has 74% of their tethers backed by USD. So assuming these governments will eventually return the seized funds, there would be nothing wrong with both companies. But no way of knowing what is going on exactly and what will happen and when it will happen. But we can assume, the market has already forgotten it, at least not impressed about it. If i am wrong here, feel free to correct me on this.
What i expect from Bitcoin. The past days, we can say the movement is a bit similar to the 3900/4200 before the big rally. Where it looked like the market should drop but simply just doesn't. Where each small drop is getting bought up like the only way is up. OI is already at 647 and keeps increasing every hour that passes. So we are even 50 mil above the high from last week when the Bitfinex news came out. So this numbers shows, there is more intrest now than the past weeks.
In my previous analysis i talked about support buying, to push price up and unload, but OI has increased so much more, it becomes less likely to think they are only trying to force a squeeze up and unload their longs with that move.
At this point, i have no real reasons to think this rally from a month ago is already over. The Bitfinex news scared me a week ago but as mentioned i think the market already forgot about that. So unless something pops up again from side that surprises the market, i think mid-term chances up are much higher than seeing the market drop again.
I have a few scenario's here:
1) We simply continue to move up with this low volume towards the 5600ish high and then break the resistance and continue to rally if we see volume increase. Think this one is not likely to happen. Think the blue line would be much more likely if we continue to go up to 5600ish
2) We drop from current 5400ish levels back down to 5150/5200 to form a higher low and then continue to move up. This is a realistic outcome.
3) We follow the red line, so we dump towards 5000/4850 again, to shake out all the longs and make all the bears happy again. This is also a realistic outcome, but as long as we stay above the 5200/5150 there is no reason to think of this one.
Below we can see some rallies from 2018 where we see nr 2 and 3 play out. If you look closely, you can draw a nice H&S there as well, just depends on what you like to see. TA is extremely subjective and also the main reason why most people loose money. Just think about it, when you don't have a position running for a while and you do some TA, i think you are probably much better at it than when you have a position running which is taking longer than you expected. Then when you start to draw lines and use magical tools, you tend use the ones that fit your view/position.
Now just like a year ago in these similar spots, it's moments like these where people loose most of their money. Because we have bulls who FOMO hold on to their pos or buy at the highs and we have FOMO bears shorting the lows. In the mean time the market moves up and down shaking out both sides several times and taking their money in the mean time. So for the day traders, my advice is, be patient and take it easy now. Wait for the nice trade setups. For the swing traders, wait for the good setups and R/R, don't short the lows or long the highs. Trading during a consolidation phase, needs an opposite strategy, so you almost have to do the opposite of what your used to do during a trending market. It goes against your instinct, which is the reason why it is so difficult.
I think we can see this sideways movement for maybe another week or 2. I hope to see the red line play out even but i am not betting on it at this moment. So first thing i am waiting for is a retest of 5150/5200 to see how that plays out, to go long there if it looks good. Or waiting for 5000/4900 and waiting for some support in that range.
The blue and red lines on the left, is something i have explained a few times already the past weeks. So to understand that, look up some of my previous posts.
So from what i can see now, the 5150ish is an important level to keep an eye on and 4900ish. Think 4800 would already be too much, think 4850/4950 should be the max.
Don't forget to like if you appreciate this :)
Part one of the long term chart
Previous analysis (worth the read):
That some governments have confiscated some funds from Bitfinex (the 850 mil) for a while now. Because Bitfinex wanted to continue business as usual, for their clients to notice nothing and being able to withdraw funds when they wanted, Bitfinex loaned money from Tether because of those seized funds. Assuming those funds will return to Bitfinex eventually and when that happens they would return the funds Tether lend to them. So this is the reason why Tether also only has 74% of their tethers backed by USD. So assuming these governments will eventually return the seized funds, there would be nothing wrong with both companies. But no way of knowing what is going on exactly and what will happen and when it will happen. But we can assume, the market has already forgotten it, at least not impressed about it. If i am wrong here, feel free to correct me on this.
What i expect from Bitcoin. The past days, we can say the movement is a bit similar to the 3900/4200 before the big rally. Where it looked like the market should drop but simply just doesn't. Where each small drop is getting bought up like the only way is up. OI is already at 647 and keeps increasing every hour that passes. So we are even 50 mil above the high from last week when the Bitfinex news came out. So this numbers shows, there is more intrest now than the past weeks.
In my previous analysis i talked about support buying, to push price up and unload, but OI has increased so much more, it becomes less likely to think they are only trying to force a squeeze up and unload their longs with that move.
At this point, i have no real reasons to think this rally from a month ago is already over. The Bitfinex news scared me a week ago but as mentioned i think the market already forgot about that. So unless something pops up again from side that surprises the market, i think mid-term chances up are much higher than seeing the market drop again.
I have a few scenario's here:
1) We simply continue to move up with this low volume towards the 5600ish high and then break the resistance and continue to rally if we see volume increase. Think this one is not likely to happen. Think the blue line would be much more likely if we continue to go up to 5600ish
2) We drop from current 5400ish levels back down to 5150/5200 to form a higher low and then continue to move up. This is a realistic outcome.
3) We follow the red line, so we dump towards 5000/4850 again, to shake out all the longs and make all the bears happy again. This is also a realistic outcome, but as long as we stay above the 5200/5150 there is no reason to think of this one.
Below we can see some rallies from 2018 where we see nr 2 and 3 play out. If you look closely, you can draw a nice H&S there as well, just depends on what you like to see. TA is extremely subjective and also the main reason why most people loose money. Just think about it, when you don't have a position running for a while and you do some TA, i think you are probably much better at it than when you have a position running which is taking longer than you expected. Then when you start to draw lines and use magical tools, you tend use the ones that fit your view/position.
Now just like a year ago in these similar spots, it's moments like these where people loose most of their money. Because we have bulls who FOMO hold on to their pos or buy at the highs and we have FOMO bears shorting the lows. In the mean time the market moves up and down shaking out both sides several times and taking their money in the mean time. So for the day traders, my advice is, be patient and take it easy now. Wait for the nice trade setups. For the swing traders, wait for the good setups and R/R, don't short the lows or long the highs. Trading during a consolidation phase, needs an opposite strategy, so you almost have to do the opposite of what your used to do during a trending market. It goes against your instinct, which is the reason why it is so difficult.
I think we can see this sideways movement for maybe another week or 2. I hope to see the red line play out even but i am not betting on it at this moment. So first thing i am waiting for is a retest of 5150/5200 to see how that plays out, to go long there if it looks good. Or waiting for 5000/4900 and waiting for some support in that range.
The blue and red lines on the left, is something i have explained a few times already the past weeks. So to understand that, look up some of my previous posts.
So from what i can see now, the 5150ish is an important level to keep an eye on and 4900ish. Think 4800 would already be too much, think 4850/4950 should be the max.
Don't forget to like if you appreciate this :)
Part one of the long term chart
Previous analysis (worth the read):
Note
Alt market cap analysis:
Note
New XRP analysis:
Note
Note
Wow, they already pulled it off again, abusing the shorts in the market to push the price up. Since alts are still not good, not compared to what they should be, it means it's not perfect at the moment. On the left we can see that resistance line from the high is still doing it's work now. So the most logical thing now would be, is seeing it moving inside this flag on the right. To keep the flag alive we need to see another touch of 5780/40 again before testing the low again. If that happens, it will be much more likely to see a continuation of the rally this weekend.
At the moment, on the low time frame, it's not looking great, some support around 5650, but no bounce yet. Think a we should see a max of 5600ish. Problem is, OI dropped 80 mil already, so a lot of profit taking already happened with this rally.
So a break of the the green support on the right, might cause a small drop, maybe a wick or maybe a bigger dump even, can't say yet. For now, it's more likely to see at least more bullish price action coming week or so, but a break of 5650 would already put that in danger a bit. So for the ones who dared to get in at 5100/5200, i would be smart and take profits partially. Because if we do continue to rally, we will probably stay in this flag for several hours, maybe even day or 2/3. That would make it much safer again, instead of this.
Note
The chart with the alts, can see they all played out as they should have in the bullish version. But when comparing it to Bitcoin, it's still very clear that they are far behind. Short term this doesn't have to mean much, think Bitcoin made it clear again that it doesn't care. but mid-term (weeks/months) i am quite sure we will see the consequences of thisNote
So far so good, following the path of a bull flag. I would still not lean back though. I have a feeling the green will break, but the question will be, will it get bought up above 5600 or not. Thing is, my whole assumption past week of expecting higher prices, was because of these whales who forced this rally. So the question is, are they already done or just beginning? I talked about support buying directly after the Bitfinex dump last week, with a possible goal to unload big bags at good prices. They have those at this moment.
But when looking back at that fractal i posted earlier this week, we could clearly see the mid-term intentions were up towards 6000/6500 to complete that fractal.
So the question is, are we still following the fractal or was it just to get out at these prices. The still decent OI tells me, more likely to see the fractal play out. But it will depend a lot on today i think. If we don't see any crazy moves and keep bouncing between 5800/5600, than each few hours that pass, the chances for another move up increases. So ideally we see stable prices and then slowly, by tomorrow maybe, we see alts start to grow a bit again. If we see this play out, it will be VERY likely to see another wave up next week.
Note
Bitcoin road map update:
Related publications
Disclaimer
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.