Buying Into Fear - Bitcoin (BTC) Long Setup
Updated
Alright guys, instead of just an overall analysis, I'm posting a potential long trade setup for Bitcoin. This trade is only recommended if the conditions are met. If you've been following my analyses, you'll see that I've been using this light blue resistance line that connects all the way from the ATH. Even though not many people "seem" to be watching this level, I have a hunch it will produce a powerful breakout if it is breached. Likewise, if it fails again, we could be due for another leg down. Just yesterday in my Bitcoin update I mentioned this area as a potential reversal zone, since we didn't have much follow through with bearish volume and longs still remained confident in their positions. In fact, volume only started increasing when the price rose from the low. We can also see that the Ultimate Oscillator is indicating a bottom. This indicator is generally a little more accurate than the RSI in predicting buy and sell areas.
The good news is, if this resistance is broken, we have likely entered an accumulation phase. This would coincide nicely with what I'm seeing in a lot of altcoins (major accumulation). If the resistance continues to fail, the bear market will likely last longer, and be even more painful.
Even better, there IS also a possibility that the market makes a complete reversal soon. Not many people are expecting this, so it would be interesting if it plays out here. This reversal is outlined here on the long term log chart, and is given credence by the two trendlines (red and orange). The orange line is the broken uptrend line, which we could soon test as resistance, in order to fall back to the red line and confirm it as the new long term support.
This would coincide with my speculation that the bull market would return at the EARLIEST in late January, early February 2019. My reasoning behind this is purely speculative. I argue that this bear market has been truly exaggerated by altcoins, many of which are new. I think this recent altcoin cycle is akin to Bitcoin's 2011 bubble, where it peaked around $30 and bottomed at $2. The timeframe for that bubble when compared to this one has our current bear cycle ending in early February. Trading off this idea is the gambler's fallacy though, as there is no reason why past performance should indicate future results in this case. Just me rambling.
Anyway, on to the setup:
LONG CONFIRMED Breakout above the blue line (3800ish) or above 3500 if you're feeling risky.
SL: Below 3500
Targets
5050 (green X - Main Target)
5100
5200
5600
6000
And even as high as 8K if a reversal occurs.
Likewise, you can SHORT if we break 3450ish, but this breakout can occur even after hitting a new low.
I've linked below my USD (DXY) analysis, which sees it as currently breaking down. This would, in theory, be good for crypto.
This is not financial advice. This is just a potential trade setup I'm seeing, given the market conditions, and I'm curious to see if it plays out. This is a dangerous time to trade. What you do with your own money is your choice.
-Victor Cobra
The good news is, if this resistance is broken, we have likely entered an accumulation phase. This would coincide nicely with what I'm seeing in a lot of altcoins (major accumulation). If the resistance continues to fail, the bear market will likely last longer, and be even more painful.
Even better, there IS also a possibility that the market makes a complete reversal soon. Not many people are expecting this, so it would be interesting if it plays out here. This reversal is outlined here on the long term log chart, and is given credence by the two trendlines (red and orange). The orange line is the broken uptrend line, which we could soon test as resistance, in order to fall back to the red line and confirm it as the new long term support.
This would coincide with my speculation that the bull market would return at the EARLIEST in late January, early February 2019. My reasoning behind this is purely speculative. I argue that this bear market has been truly exaggerated by altcoins, many of which are new. I think this recent altcoin cycle is akin to Bitcoin's 2011 bubble, where it peaked around $30 and bottomed at $2. The timeframe for that bubble when compared to this one has our current bear cycle ending in early February. Trading off this idea is the gambler's fallacy though, as there is no reason why past performance should indicate future results in this case. Just me rambling.
Anyway, on to the setup:
LONG CONFIRMED Breakout above the blue line (3800ish) or above 3500 if you're feeling risky.
SL: Below 3500
Targets
5050 (green X - Main Target)
5100
5200
5600
6000
And even as high as 8K if a reversal occurs.
Likewise, you can SHORT if we break 3450ish, but this breakout can occur even after hitting a new low.
I've linked below my USD (DXY) analysis, which sees it as currently breaking down. This would, in theory, be good for crypto.
This is not financial advice. This is just a potential trade setup I'm seeing, given the market conditions, and I'm curious to see if it plays out. This is a dangerous time to trade. What you do with your own money is your choice.
-Victor Cobra
Note
Getting VERY close to that resistance now. If we break down hard, it won't be a good sign for the market, but I'm cautiously bullish at the moment. We seem to be consolidating slightly ABOVE previous support, which is good. Volume hasn't dried up too much either. Note
The breakout zone is now around 3737, but I think anything below 3800 is still "fakeout" territory, based on how we behaved the last time we met this line.Note
Whichever way this breaks, I have a feeling it'll be a powerful move.Note
If we end up breaking down, we still have the 200W EMA as support. However, weakness in this zone would indicate that we still need a capitulation low, and this long setup will be invalidated.Note
This would be a zone for the "risky long", with a stop loss below 3500 or 3450, depending on your risk tolerance. This would be a risky trade, since we are very close to the resistance. But as I said, a move in either direction will probably be strong. I posted this idea because I feel like less people are expecting an upwards breakout at this point, and wanted to be a little contrarian. But the downside is still very possible, which is why this trade is only meant for certain conditions.Note
This line is STILL acting as resistance. The only good thing I can say about this is that it wouldn't take much of a push up to break out. It currently lies less than $100 overhead, below 3700. Note
It's also possible that we touch the weekly 200 EMA in the 3200 region first before a potential reversal. Either way, best to wait for a breakout, or buy at the 200 EMA if we make it down there.Note
That's the 200W MA not EMA. The EMA is above, I believe.Note
We're right up against this second important resistance line (in orange). Despite the low volume, if we can get some big buys pushing us through, we could attract more buyers at higher levels. Right now, both buyers and sellers are afraid of entering positions. Note
The sellers have the advantage here at resistance, so buyers are rightly cautious. We're at the mercy of the whales now.Note
The only chance that we have now is if we can close this 4H candle above the orange resistance. Then perhaps we can attract some buyers to test the 3650 area. If we see a big bearish rejection there, we will likely have to go down and test 3450-3500. Note
Watching this closely now. JUST managed to hold the broken line as support. Let's see if the whales show up. Note
Even if we do manage to break the light blue resistance, we broke back below it last time. This means that anything below the purple line (now at 3720ish) is fakeout territory. Be careful. There should be some wild moves happening soon. Note
Absolutely needs to hold this level. Note
Signs are showing that we should be in for a big drop soon....but there have been so many fakeouts recently that don't necessarily adhere to TA. It makes me wonder if anyone really knows what the direction of the market will be.Note
Such tight price action. Jesus. Note
Pinching like crazy. If we can somehow get back above BOTH orange trendlines, that would be a pretty bullish setup. Note
Odds are now in favor of a drop. But who really knows with this market. Those lines look like they're about to slip away.
Note
Let's see what happens at the converging point. This often causes some sort of big move. Possible last chance for the bulls. Note
And the bulls are still here! Alright, I'll stop updating for now until we get a major move. Note
So we tested the light blue resistance and got rejected AGAIN. No surprise there. Let's see if we can attempt again with more volume or if we dump hard. Note
Touching resistance again, with slightly increased volume. Buyers are keeping the pressure on, which is good. If we do see a breakout here, the same descending resistance line is actually a couple hundred points higher on the Bitfinex chart, which could mean that we run into some sellers in the 3800 zone. Probably won't be super safe until we get above 3900. I guess we'll see. We should be watching for a breakdown or breakout over the next 24 hours, in any case.Note
These sells just keep getting eaten up. A lot of absorption, like what I saw going on at lower levels (3.2K-3.3K)Note
We also keep getting rejected. There's really no way to truly know which way it'll break...until it does. This is why I think it would only be safe to buy when we're a considerable ways above the resistance, or if we close a daily candle above it. Failing at this particular resistance line looks very bad for the market though, and the next support below 3200ish is around 1.8K. The buyers haven't quite given up yet but they appear to be running out of steam.Note
If we start to paint an ascending triangle, kind of like this, then buy pressure could build enough to fuel a breakout. Note
I know I said buy once the resistance is broken, but we need buyers in the first place. SOMEONE has to do it.Note
Ascending triangle is now in play. Note
Looks like any possible ascending triangles have been invalidated for now. Volume is dropping again. No one wants to buy here. Everyone is waiting for someone to do the heavy lifting for them. But if no one wants to buy....who will? Then again, this could be another trap. We've seen tons of these over the last week, in altcoins as well. Note
What I mean by "trap" is not following normal support and resistance zones, and getting people to sell in areas that would normally indicate a breakdown.Note
Well, volume has declined a bit again and we're stuck in this area. I'm seeing some alts sell off now. Either it's a "trap" or we're going to drop hard like we did at 4K. I'm going to step out of the market for now. Remember, this is only a safe buy if we break out. We may be about to see a capitulation low. To get an idea of what that may look like, you can see my main Bitcoin analysis (linked below). Note
Well it looks like we've broken this downtrend line! That's extremely good for the market, actually, and I'm feeling a bit better. HOWEVER, we are still in fakeout territory because the same line on the Bitfinex chart is a little higher. We aren't in the "safe long" area yet. We need to break that zone, around 3900 (Bitfinex) Note
As I said, this was still fakeout territory, so a drop to support was not unexpected. It's actually relatively bullish that we haven't had much follow through yet. Additionally, we've just tested the broken Coinbase line as support. Also, alts are still showing signs of accumulation. Another interesting thing to note is that longs have actually INCREASED on this drop.These big longs actually might be confident enough to indicate a bottom. This means bulls haven't thrown in the towel yet. I guess we'll see what happens in the next day or so. https://tohttps://www.tradingview.com/x/xM2dF8Ig/Note
Note
So far, we're still riding this broken resistance as support, but the market looks really weak right now. Any push up is met with resistance. There are clearly not enough buyers at the moment. This means that we may experience yet another drop, like what we had at 6K. This could potentially be the capitulation low many have been waiting for. The market doesn't have to do anything we want it to though. There's even a possibility we will never see a new ATH value. It'll be interesting to see whether this can turn around soon, or if it simply fades away.Note
So we have a nice bullish doji candle forming now on the broken resistance, which is a good sign, especially on Monday, which often sets the tone for the week. If today's candle can close green, that would be a good sign. Volume is increasing a little bit as well. Note
I can't help but feel this is just like what happened in the 6K area for Bitcoin, but perhaps we'll get a surprise rally soon. It's interesting that we wicked down just below an area where people had a lot of stops. As I've been saying, patterns that normally would indicate a breakdown have been breaking up (with alts as well). These moves confuse the market and make people not want to trade. Since we technically broke out and bounced off the downtrend line as support, one could take a risky long here and set stops wherever they think would be best.Note
Moment of truth on the Bitfinex chart: Note
Still working on that Bitfinex resistance. What I really don’t like is when we test major resistance on low volume. If someone decides to buy a lot here though...we could see a big breakout. The fact that we’re entering the weekend at this price level isn’t good. In fact, this has continuously happened throughout the bear market. Perhaps this time will be different....it needs to be in order to increase the likelihood that we’ve seen bottom. Note
Break of Bitfinex resistance and then successful test. Note
We’re just riding the line on the Bitfinex chart. This wedge is interesting, as the top resistance connects to a the previous meme triangle resistance. Note
These are the possible scenarios I'm looking at. The Bitfinex resistance has proven too much, and buyers didn't show up as I had expected. Note
Interestingly enough, this setup trchnically worked out, in the sense that once the resistance was broken, we tested it and then moved sideways before finally rising in price.Note
Talk about a delayed reaction!Note
Looks like we may target the pink descending resistance (currently around 4400). The good thing is, this would be our first higher high, even if we dropped from there back to the mid 3K area.
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