Honeybadger Hijinks: A Long Thesis (BTC/USD)
Updated
Following an impressive run to the upside following the March COVID-19 liquidity crisis,
the lovable honeybadger appears eager for more. On the chart today you'll notice a few items:
1: An ascending triangle forming on the daily. Typically, ascending triangles are viewed as a continuation pattern.
2: A steadily rising RSI. RSI between 50-70 is a bullish indicator that lends further credence to a long thesis.
3: Significant volume to the upside. You can see this by looking at the green and red bars lining
the bottom of the chart. Green bars represent a period of buyer dominance while red bars indicate
that sellers were in control. If you ever hear someone talking about breaking through
with "conviction", they are referring to the volume of shares traded during a price move.
4: Moving Averages all sloping upward. These lines typically act as both support (should the price fall towards it)
or resistance (if the price rises towards it). The longer Bitcoin maintains a price higher than the
Moving Averages, they will continue to rise and provide further insulation against lower prices.
5: Fundamentally, the Fed continues to devalue
USD and global tensions are on the rise.
Investors typically seek safe havens for their capital during periods of inflation and unrest.
Bitcoin provides increasing opportunities for wealth preservation as equity valuations
reach higher highs and fund managers become more open minded to gold alternatives.
Should the price break upwards out of the triangle, I expect further continuation
to the 1.618 level at $12,783 with some brief stops at $12,000 (July 3/August 7 2019 highs)
and potentially $12,555 (July 9,2019).
HOWEVER.
Ascending triangles can fail, and we witnessed a parabolic increase in price over a period
of days. Hogs get slaughtered. Should the price break downward outside of the triangle, I expect further selling pressure
as the reluctant honeybadger retreats to the Fibonacci retracement levels. They are:
0.786- $10,898
0.618- $10,514
0.5- $10,246
0.382- $9978
0.236- $9647
The black diagonal line represents the months-long upward trend since lows in March.
Should the price break downwards, it will be up to this trend line to provide support.
While my overall thesis remains long, it seems prudent to prepare for potential downside.
Technical Analysis often gets shit for its deceptively malleable relationship with the truth.
"Price went up, I totally called it!" "Price went down, oh yeah, I called that, too!"
Technical Analysis does not attempt to predict the future with guarantees, rather it is
a science used by traders seeking to gain data-driven insights into market behavior. Blackjack
players read a table to calculate the probability of the next card and increase their
winnings. We are in many ways doing the same.
If you are a short term trader, consider exiting the trade should the price close outside
the triangle on the 1H timeframe. If you are a longer term trader, it may be less stressful
to consider a Dollar Cost Average approach should prices trend lower instead of closing
positions for a loss.
Happy trading!
the lovable honeybadger appears eager for more. On the chart today you'll notice a few items:
1: An ascending triangle forming on the daily. Typically, ascending triangles are viewed as a continuation pattern.
2: A steadily rising RSI. RSI between 50-70 is a bullish indicator that lends further credence to a long thesis.
3: Significant volume to the upside. You can see this by looking at the green and red bars lining
the bottom of the chart. Green bars represent a period of buyer dominance while red bars indicate
that sellers were in control. If you ever hear someone talking about breaking through
with "conviction", they are referring to the volume of shares traded during a price move.
4: Moving Averages all sloping upward. These lines typically act as both support (should the price fall towards it)
or resistance (if the price rises towards it). The longer Bitcoin maintains a price higher than the
Moving Averages, they will continue to rise and provide further insulation against lower prices.
5: Fundamentally, the Fed continues to devalue
USD and global tensions are on the rise.Investors typically seek safe havens for their capital during periods of inflation and unrest.
Bitcoin provides increasing opportunities for wealth preservation as equity valuations
reach higher highs and fund managers become more open minded to gold alternatives.
Should the price break upwards out of the triangle, I expect further continuation
to the 1.618 level at $12,783 with some brief stops at $12,000 (July 3/August 7 2019 highs)
and potentially $12,555 (July 9,2019).
HOWEVER.
Ascending triangles can fail, and we witnessed a parabolic increase in price over a period
of days. Hogs get slaughtered. Should the price break downward outside of the triangle, I expect further selling pressure
as the reluctant honeybadger retreats to the Fibonacci retracement levels. They are:
0.786- $10,898
0.618- $10,514
0.5- $10,246
0.382- $9978
0.236- $9647
The black diagonal line represents the months-long upward trend since lows in March.
Should the price break downwards, it will be up to this trend line to provide support.
While my overall thesis remains long, it seems prudent to prepare for potential downside.
Technical Analysis often gets shit for its deceptively malleable relationship with the truth.
"Price went up, I totally called it!" "Price went down, oh yeah, I called that, too!"
Technical Analysis does not attempt to predict the future with guarantees, rather it is
a science used by traders seeking to gain data-driven insights into market behavior. Blackjack
players read a table to calculate the probability of the next card and increase their
winnings. We are in many ways doing the same.
If you are a short term trader, consider exiting the trade should the price close outside
the triangle on the 1H timeframe. If you are a longer term trader, it may be less stressful
to consider a Dollar Cost Average approach should prices trend lower instead of closing
positions for a loss.
Happy trading!
Note
Trade is in motion. Here is a closer look at the 4H chart with an updated trend line.Note
4H view. Entering into a new ascending triangle. Well respected for now.
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