Short

Bitcoin is in Wyckoff Distribution Schematic 2

Updated

Bitcoin appears to be in Wyckoff Distribution Schematic 2. 58k was the real top with buying climax. From there heavy selling was the last action in this chapter and volume has been declining since. 62K top was a UT no-demand candle which sealed Bitcoin's fate. Price is currently in LPSY. Price should not be able to hold for any significant length of time from herein. I expect to see SOW in the the not too distant future, then into Mark Down.

I don't have a crystal ball but even the mighty Bitcoin finds refuge in resistance turned support, and there isn't any until 20K.

This is a handy website for anyone that would like to see the Wyckoff Schematics and learn the terms stockcharts.com/articles/wyckoff/2015/09/distribution-definitions.html

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Bitcoin has rejected from the the upper channel to form a wicked 4hr candle. If 62K UT upthrust was the top then price should not drift into the upper territory or else a last gasp UTAD upthrust-after distribution may ensue to a higher high and then price would be in distribution schematic 1. However in this instance it would appear much more likely that upward momentum stalls right here at resistance and price to top out and form LPSY last-point-of-supply phase C, move back down into channel and complete schematic 2. Momentum looks to be done and Bitcoin cooked.

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Price has pushed into the upper territory however it may not have legs to remain with price forming a rising wedge which will likely break to the downside to form LPSY, a first lower high, which would then become the right shoulder of an H&S.

Worth noting also that this will be a third divergent peak.

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Price broke out of the rising wedge to the downside to fall back into the distribution channel and probably has now formed LPSY. Assuming LPSY is complete, price will move into phase D. SOW sign-of-weakness should test the support lines down at 43 and 44K following some lower highs LH and lows LL, punctuated with some high volume sell (panic) candles.

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After falling out of the wedge to the downside, price teased in an upthrust to almost invalidate and make a higher-high, but that is always the way - flirting with invalidation but never quite getting there. Lower degree LH formed and this juncture is almost certainly now a bull trap to become another very corrective looking domed failure.

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The Plan B stock-to-flow-model does not guarantee a straight path to 250K. If you think it does, you may need a plan C.

Trade active

Opening a small short here at 59K.

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While this domed failure is slowly completing, a moment to reflect. To anyone looking at the chart it should now be apparent that Bitcoin is printing a lower high and that should be a big red flag. The fire alarm is sounding, smoke wafting around, but the psychology is fascinating:- no-one seems to notice and no-one seems to care. "Euphoria" it is and everyone is throwing caution to the wind, imbued by their past gains and a thirst for more. Even your favourite charting hero at this point is long without a thought of looking down. Could it be that they're all buying the top? Surely not. Bitcoin trending to 250K they said, altcoin super-season they said, buy the f* dip they said, institutional buying won't let it drop they said, PayPal, Tesla, celebrity Bitcoin purchases and tweets they said. And don't get me wrong, Bitcoin will get there, some day... But the markets aren't here so anyone can just rock up for a free lunch, hold hands with other believers, sing Kumbaya, have their ego massaged and go home with a big bag of treats.

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Many think that price is in a continuation pattern building pressure to burst upward towards 100K (and beyond). As a commenter below said, "we're forming a giant pennant which we know is a continuation pattern." But do we know this is a continuation pattern? What is the force that drives price into these fractal shapes?

Volume.

If price action is the car then volume is the fuel. If there is plenty of fuel then price goes upward on impulsive fractal journeys, but when the fuel is running out, price no longer has the momentum to go on journeys, and try as it might to conquer hills and print higher highs, it no longer has the impetus due to lack of fuel. And when eventually the gas does run out, price returns home to re-fuel.

Price is certainly in a fractal shape currently but is it a continuation or reversal? Press "play" on the chart and you'll see that volume continues to decline since long ago and the only spikes of any significance are selling not buying. And right now price is yet again attempting to get up a hill to print a higher high, but how can it do that with less buy volume and more sell volume than the previous hill? Surely it will fail again.

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Yet another upthrust to trap even more longs has formed a shooting star (bearish) on the daily candle. This Bitcoin chart pattern may be extending further than the textbook Wyckoff schematic 2, but its still following the same principles. Another upthrust only moves LPSY last-point-of-supply top to the right. Nothing else has changed. SOW sign-of-worry to come when this fractal eventually breaks down.

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Now into schematic 1 after new ATH = UTAD upthrust-after-distribution. Price appears to be forming a wedge and also nice fib time phi ratio 1.618 to find the potential top from previous oscillation.

Trade active

Added a small amount more to short at 63K. Not betting the farm.

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BTC looking weak now. Just a matter of time before the trap door closes shut.

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Comment: Hodlers are all invincible geniuses now. They'll proudly tell you how their lifestyle is changing but yet they haven't cashed out a penny / cent

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Trend is breaking down. Does this look like a bullish pennant to you?

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Many alts will likely lose 90%+ from their highs. 2021 gains will be wiped out.

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With price breaking out of trend channel and rising wedge it is likely that UTAD is the top and price has moved into phase D. Possible retest of the wedge but price will likely head down to SOW and finally collapse into Mark Down.

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Complacency: "We need to cool off for the next rally."

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BT(F*)D ??

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Bitcoin has printed its first bearish weekly Heikin Ashi candle in over half a year. If you're not familiar with Hekin Ashi they are very useful for trend following and reversals. Now is a good moment to look at Willy Woo's all important 20 week moving average as price is fast approaching. For the entire 2015 bull run price didn't even print one Heikin Ashi candle with the body closing below the 20Wma.

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When the MACD and signal lines cross the trap door shuts. Everyone and their second cousin is buying the dip here, bullish sentiment is through the roof. Meanwhile the fat lady is warming up backstage.

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Quite a strong bounce here immediately after the bearish weekly candle print. Its a teasing game. Who would bet against Bitcoin re-testing the BC buying-climax and possibly UT upthrust resistance line(s) from here. Whether it does or doesn't, LPSY last-point-of-supply looks to be on the cards now.

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Probable that Bitcoin will form a H&S failure. This could perhaps be with right shoulder topping near BC resistance to form LPSY, something like this:

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I called Bitcoin top one month ago when all your charting heroes were long, calling for 100K and many of them probably still are. See you at 20K.

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On daily chart both MACD and signal lines now below 0 for first time since the start of the trend back in October. This is not something that will happen without a serious retracement or more to follow.

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Approaching 58K as suggested. Don't be surprised if there is a little bull tease to end the tale.

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Two 1:1 fib extensions project to 61K area. Probable price will reverse there.

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Fibs amended to project C waves to almost identical 62K range. I've opened a new thread for a potential short, but I'll update this one until the distribution phase is complete.

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Q. Why is it when you say something bearish to a hodler they will say "Its not the same market as last cycle," but if you ask them why they are bullish their answer is always found in looking for the previous cycle to repeat itself...

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Price looks to be forming a move to the upside that may reach a new UTAD ATH by 1-2%. But these are corrective ABC not impulsive moves. Since 62K top, the previous top was an ABC and if C length = A then the next top will be corrective also. Very unlikely there will be an impulsive end to this top. It could also truncate and collapse at 0.618, but good chance top will now be 66.5K and reject off the lower trendline.

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The smug-o-meter just hit 12. You really don't even need to be able to read a chart at this point to see what is about to happen.

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Although different in context these two fractals appear to be quite similar. The first at the end of a long coil upward had no bounce, just a sluggish lurch upward before momentum ripped to the downside. Could something like this be happening again? It looks like LPSY now and perhaps there's not any bounce left at all. It may drag sideways and up similar to 2018 before a rip to the downside.

Also comparing to Wyckoff blueprint, the distributive phase B and C have been very long relative to the volatility of Mark Up. Price has held on and on. For that reason I would expect phase D into Mark Down to be very sudden, similar to the 2018 drop from 6K.

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Getting very close now.

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Price tightening coil ?

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This was LPSY btw but for anyone following I would guess you don't need me to draw it on. Phase D LPSY finally, moving down to SOW next, then Mark Down.

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Looks like we're nearly there.

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Price has finally reached and breached SOW. Notice that price has wicked through but candle body has pulled back to support area. Next stop - Mark Down.

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After SOW into Mark Down there is support only at 28.7K and then that is just about it all the way to sub 20K. It could get wild.

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Each crossing of the SOW and AR support lines trigger more and more orders, trapping both buyers and sellers. Its an arm wrestle with pressure building. Social media and youtubers going wild "BUY BUY BUY!!" Buyers are rushing in to purchase at what they think is strong support and a GREAT opportunity. But what they fail to realise is that the trend has now turned and even the strongest support will not push back the tide. They are the last line of defense before the dam breaks and Mark Down begins.

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Now into Mark Down and that concludes this Wyckoff distribution 1 for Bitcoin. Its been a long journey through this topping formation. I hope you enjoyed the show!

For anyone interested I may put together a group where I'll share an open portfolio and/or provide charting tuition with a specific focus on crypto, depending on what is wanted, in preparation for the next bull market. PM me if of interest.

I will keep posting threads on BTC and ALTs also.

Thanks guys!

dRends35

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