BTC - Possible Recovery or Breakdown Targets
Quick Notes: I am providing potential bullish and bearish targets for the next 24-48 hours. Closing at or above bullish recovery targets today will signal the possibility of a mid-cycle correction and continuation of the bull market. Failure to close at or above the bullish targets will lend weight to the possibility of a bear cycle or full-on bear market starting. If the price breaks down further, I provided the next few targets/support zones but will be surprised if it closes below 40k in a bearish scenario.
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What a rollercoaster ride. First let me say that this is a stressful time- everyone is wondering "is the bull cycle over?" "is this a mid cycle slump?" "is Elon to blame?" ... the answer to all of that is, in my opinion,"maybe... but it doesn't matter." We have to trade on the price action/charts at the end of the day. And right now the charts are presenting two possibilities, or directions from here:
>>Scenario 1- Bullish Recovery: I posted two targets that we need to close on to consider Bitcoin in a recovery mode. First is the 20/21w Bull Cycle MA; second is the support zone we blew past in our drop on the 12th around 52.8-53k.
Failure to recapture these targets make the possibility of a bear cycle or bear market much more likely. The first task is to recapture the 20/21w Bull Cycle supports (bull recovery target 1).Historically these are retested but respected in a bull market.
Interesting was seeing the daily candle close -exactly- at the 20w SMA, before continuing to drop, retest the 200 EMA and bounce. In earlier cycles we saw a lot of wicks under the 20/21w Bull Cycle MAs, but only a single instance with the daily closing under it, in 2013. The fact that we closed yesterday exactly at the 20w SMA indicates whales/MM may respect this support.
Bottom Line for a Possible Bull Recovery: Today is the real test- whales/MM don't want to buy into retail weakness if this is a mid-cycle correction, because they want to accumulate for the next leg of the bull market. So if we see the price stabilize over those MA, and we see healthy outflows, that will signal to me that the bull market is simply preparing for the next leg up.
>>Scenario 2- Bearish Breakdown: I posted the next target if the price continues to breakdown. Our next support is between 38-40k. This is where we broke out after the February "Tesla/Elon candle." It is also the next strongest support zone. Today I could see possibly wicking to that range and bouncing back, but failure to find support will see continued drops with 32-36k as our strongest support of this cycle and likely the lowest practical target for a correction or a bear cycle (in my opinion).
Given that we succesfully tested the 200 MA, we may see a double bottom there and bounce back to retest the 20/21w MAs, but with the possibility of rejecting there and dropping again. In any case be prepared for further drops if we close the day under the 20/21w MAs, and if we drop below 40k, look for support around 36k and lower at 32k.
Bottom Line for Possible Bearish Breakdown: The lower we go, or if we close below the 20/21w MAs, or if we break under the 200 MA, the odds of a bear market increase dramatically.
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Other Notes:
First a little context, because I think this important- When Elon tweeted the other day, that wasn't the primary reason for the dump. In fact I would consider it less of a trigger, and more of something an insider knew of, and took advantage of; let me explain-
Unknown to a lot of traders is that hours before his tweet, someone moved ~20,000 Bitcoins to exchanges and started to quietly nudge the price down. This was the largest single inflow of Bitcoins to exchanges in over 3 years. That is a LOT of Bitcoin.
You can observe a gentle downtrend after those coins hit the exchanges, but interestingly BTC price actually appears to start recovering in the hour after Elon tweets, before an unexpected and very aggressive price drop that blew through multiple supports.
Of course its hard to prove anything, such is life when trading cryptocurrencies. Insider trading, pump and dumps, hackers, and the numerous challenges of regulating a decentralized speculative market. But if we were to speculate- someone with insider information either unknown to Elon/Tesla, or in coordination with them, setup the market for a significant drop.
i.ibb.co/ryxKk4P/Elon-dump.png <--- brief summary of timelines for that dump on the 12th.
Now we have to acknowledge that Bitcoin was already struggling, its price action was weak after months of consolidation and a correction was probably due. But that dump was far from natural and almost certainly the result of that large inflow of Bitcoin.
Okay- so you are asking why dump big bags, are they offloading for bear cycle? Well oddly enough if you look at exchange outflows (meaning people buying Bitcoin and moving it off exchanges), and you look at the exchange reserves (meaning how much Bitcoin is sitting on exchanges right now), and you look at the industry investment (over the counter-OTC) purchases- it paints a mostly bullish picture.
You do not see big money offloading Bitcoin, you do not see a massive selloff and you see OTC investment continuing. I honestly think the MM saw weakness in the retail market, and needed to reset market sentiment, and take the opportunity for cheaper Bitcoin to stock up before the next leg. HOWEVER- that doesn't mean that I am right. I am not a financial advisor, I am not a 10 year Bitcoin trader. So apply risk management and trade only what you are comfortable with.
------
What a rollercoaster ride. First let me say that this is a stressful time- everyone is wondering "is the bull cycle over?" "is this a mid cycle slump?" "is Elon to blame?" ... the answer to all of that is, in my opinion,"maybe... but it doesn't matter." We have to trade on the price action/charts at the end of the day. And right now the charts are presenting two possibilities, or directions from here:
>>Scenario 1- Bullish Recovery: I posted two targets that we need to close on to consider Bitcoin in a recovery mode. First is the 20/21w Bull Cycle MA; second is the support zone we blew past in our drop on the 12th around 52.8-53k.
Failure to recapture these targets make the possibility of a bear cycle or bear market much more likely. The first task is to recapture the 20/21w Bull Cycle supports (bull recovery target 1).Historically these are retested but respected in a bull market.
Interesting was seeing the daily candle close -exactly- at the 20w SMA, before continuing to drop, retest the 200 EMA and bounce. In earlier cycles we saw a lot of wicks under the 20/21w Bull Cycle MAs, but only a single instance with the daily closing under it, in 2013. The fact that we closed yesterday exactly at the 20w SMA indicates whales/MM may respect this support.
Bottom Line for a Possible Bull Recovery: Today is the real test- whales/MM don't want to buy into retail weakness if this is a mid-cycle correction, because they want to accumulate for the next leg of the bull market. So if we see the price stabilize over those MA, and we see healthy outflows, that will signal to me that the bull market is simply preparing for the next leg up.
>>Scenario 2- Bearish Breakdown: I posted the next target if the price continues to breakdown. Our next support is between 38-40k. This is where we broke out after the February "Tesla/Elon candle." It is also the next strongest support zone. Today I could see possibly wicking to that range and bouncing back, but failure to find support will see continued drops with 32-36k as our strongest support of this cycle and likely the lowest practical target for a correction or a bear cycle (in my opinion).
Given that we succesfully tested the 200 MA, we may see a double bottom there and bounce back to retest the 20/21w MAs, but with the possibility of rejecting there and dropping again. In any case be prepared for further drops if we close the day under the 20/21w MAs, and if we drop below 40k, look for support around 36k and lower at 32k.
Bottom Line for Possible Bearish Breakdown: The lower we go, or if we close below the 20/21w MAs, or if we break under the 200 MA, the odds of a bear market increase dramatically.
--
Other Notes:
First a little context, because I think this important- When Elon tweeted the other day, that wasn't the primary reason for the dump. In fact I would consider it less of a trigger, and more of something an insider knew of, and took advantage of; let me explain-
Unknown to a lot of traders is that hours before his tweet, someone moved ~20,000 Bitcoins to exchanges and started to quietly nudge the price down. This was the largest single inflow of Bitcoins to exchanges in over 3 years. That is a LOT of Bitcoin.
You can observe a gentle downtrend after those coins hit the exchanges, but interestingly BTC price actually appears to start recovering in the hour after Elon tweets, before an unexpected and very aggressive price drop that blew through multiple supports.
Of course its hard to prove anything, such is life when trading cryptocurrencies. Insider trading, pump and dumps, hackers, and the numerous challenges of regulating a decentralized speculative market. But if we were to speculate- someone with insider information either unknown to Elon/Tesla, or in coordination with them, setup the market for a significant drop.
i.ibb.co/ryxKk4P/Elon-dump.png <--- brief summary of timelines for that dump on the 12th.
Now we have to acknowledge that Bitcoin was already struggling, its price action was weak after months of consolidation and a correction was probably due. But that dump was far from natural and almost certainly the result of that large inflow of Bitcoin.
Okay- so you are asking why dump big bags, are they offloading for bear cycle? Well oddly enough if you look at exchange outflows (meaning people buying Bitcoin and moving it off exchanges), and you look at the exchange reserves (meaning how much Bitcoin is sitting on exchanges right now), and you look at the industry investment (over the counter-OTC) purchases- it paints a mostly bullish picture.
You do not see big money offloading Bitcoin, you do not see a massive selloff and you see OTC investment continuing. I honestly think the MM saw weakness in the retail market, and needed to reset market sentiment, and take the opportunity for cheaper Bitcoin to stock up before the next leg. HOWEVER- that doesn't mean that I am right. I am not a financial advisor, I am not a 10 year Bitcoin trader. So apply risk management and trade only what you are comfortable with.
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