BTC to Test Support of a Wyckoff Re-Distribution Trading Range
Updated
The BTC price continues to be observed in Phase B of a Wyckoff re-distribution trading range. We should consider this a re-distribution trading range (to be confirmed or to fail based on market events) rather than a re-accumulation trading range as the BTC price has been in a down trending environment for the past 6 or so months. This Wyckoff re-distribution trading range (upper bound = $31,520; lower bound = $25,340) is interesting in that the price has spent the majority of the time in the upper portion of the trading range (green shading, lower boundary of the upper portion is given by the low of the preliminary support (PS) event). In most cases, the price would test the trading range support level ($25,340) several times as it moves through the range so, in this regard, the trading range is a bit atypical.
That said, it appears that BTC will be testing the trading range support level ($25,340) soon as it already has broken support at the PS event and the BTC price is observed in the lower portion of the trading range (red shading, lower boundary of the lower potion is given by the selling climax low) in what might be a shakeout/sign of weakness (SO/SOW) event. This idea is consistent with the Phoenix Ascending (PA) indicator, given in the lower panel. I expect both the red and blue lines and likely the BTC price to continue on their downward trajectory.
Note the low volume over the last week compared to the climatic volume observed at the PS and selling climax (SC) events. This tells me two things: (1) The BTC price is able to move downward through the trading range with relative ease. If the trading range support is to hold then demand needs to be observed. (2) As the beginning and the end of Wyckoff trading ranges are typically marked by climatic level volume, BTC will likely continue within this trading range.
Significant bars, which help define important areas of support and resistance, are given by the blue shading. Wyckoff abbreviations: automatic rally (ARa), selling climax (SC), secondary test (ST), upthrust (UT), preliminary support (PS), failed upthrust (FUT), last point of supply (LPSY), shakeout (SO), sign of weakness (SOW), Phase A (Ph A), Phase B (Ph B), Phase C (Ph C), Phase D (Ph D), Phase E (Ph E).
This is not financial advice. I am not your financial advisor. This is my opinion.
That said, it appears that BTC will be testing the trading range support level ($25,340) soon as it already has broken support at the PS event and the BTC price is observed in the lower portion of the trading range (red shading, lower boundary of the lower potion is given by the selling climax low) in what might be a shakeout/sign of weakness (SO/SOW) event. This idea is consistent with the Phoenix Ascending (PA) indicator, given in the lower panel. I expect both the red and blue lines and likely the BTC price to continue on their downward trajectory.
Note the low volume over the last week compared to the climatic volume observed at the PS and selling climax (SC) events. This tells me two things: (1) The BTC price is able to move downward through the trading range with relative ease. If the trading range support is to hold then demand needs to be observed. (2) As the beginning and the end of Wyckoff trading ranges are typically marked by climatic level volume, BTC will likely continue within this trading range.
Significant bars, which help define important areas of support and resistance, are given by the blue shading. Wyckoff abbreviations: automatic rally (ARa), selling climax (SC), secondary test (ST), upthrust (UT), preliminary support (PS), failed upthrust (FUT), last point of supply (LPSY), shakeout (SO), sign of weakness (SOW), Phase A (Ph A), Phase B (Ph B), Phase C (Ph C), Phase D (Ph D), Phase E (Ph E).
This is not financial advice. I am not your financial advisor. This is my opinion.
Note
Shown here is the BTC price in the weekly (left panel) and monthly (right panel) time frames with the Bad Ass Bollinger Bands (BA BBs, upper panel) and the PA indicator (lower panel). In the monthly time frame, I expect the red and blue lines to continue on their downward trajectory for several more months. They might reach a bottom and start turning up this fall. Interpretation of the BA BBs and PA indicators in the weekly suggest a test of the trading range support. At the moment, the indicators do not suggest a capitulation-type event in the weekly time frame.Note
Now that the BTC price has broken the Wyckoff re-distribution trading range support, one might ask: Where might the BTC price find support? One possibility is that BTC may find support around the Dec 2017 high around $19,490. Let's watch carefully to see if the BTC price does, indeed, fall to that support level and if that support level holds.Note
A few things of interest here: (1) Note the dramatic increase in volume on the June 13 SO/SOW bar. The level of volume is greater than that observed for the PS event but less than that observed for the SC event.
(2) The SO/SOW bar is highly significant. Weak hands, who have been in massive amounts of psychological pain for months, are finally capitulating their position to strong hands. It’s as if they are saying “I just can’t take it anymore! Please, please just take this BTC off of my hands!”. Strong hands/value investors/composite operator (CO) types are happy to oblige weak hands and buy here and hold as a long-term investment. Weak hands get some much needed psychological relief.
(3) Note the very large demand tail on the SC and the June 14 bar (see areas highlighted in yellow). Strong hands/value investors/composite operator (CO) types are perceiving value here (and they only buy value) and are buying heavily. What affect does the strong buying have on the price? It stops the price from moving further to the downside.
(4) With regard to the PA indicator (bottom panel), given the downward trajectories for the blue, red, and green lines, one might expect the price to continue a bit more downward from here. That said, I don’t see any aggressive downward moves for BTC over the next few days. Note how the Energy (momentum indicator, grey shaded area) is dissipating. This also supports the idea that the momentum of this downward move is decreasing and may reverse over the next few days.
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