DIGITAL ALPHA UPDATE - BTC loves triangle dancing

Updated

Hello everyone! It has been some time since an update here from Digital Alpha. There was some family business to attend to, glady it was joyous "business". Now that things have calmed down a bit I'm able to write up a quick BTC update. Now this is more of a "potential" scenario. If you followed the last update on the Triangle Dance you can see Digital Alpha developed a solid road map. We laid out the potential scenarios and the one we said was "most likely" did play out. Hopefully you enjoyed some solid gains there. This play is only one scenario. An accumulation ABCDE triangle.

ABCDE triangles are mostly made up of ABC patterns, which is outlined in blue. Before entering this pattern BTC was in an ABCDE pattern, BUT it broke down - continuation of the previous trend. Technically speaking, the continuation of this larger triangle (white ABCDE) would result in a plummet to sub 6k levels. However, the overall trend of the ABCDE is trending up a bit. Due to this, we can expect a bounce off the blue hashed support around 7.6k levels and move towards a breakout. If we fall below, then that is when you can have your sights set on 6k. IF we do bounce off support and breakout look for a retest of 10k levels...if so, it will happen fast. The scenario I laid out in the previous post where we test 10k, bounce, test the blue hashed line (previous resistance) as support, will potentially play out.

Hopefully this gives you a fresh outlook on BTC! From your friends at Digital Alpha, thank you for reading.

- DA BULL

As always, please join our telegram. We are building up our followers to give access to ICO airdrops and to start doing raffles. We also keep track of our Large-Cap portfolio so you can see how to manage a crypto portfolio.

Note

Just in case you wish to read my previous Triangle Dance post:

DIGITAL ALPHA UPDATE - BTC The Triangle Dance

Trade active

Volume is still decreasing, seems we have begun to reach for 'B' here. 'B' is valid to about $8950. A retest of the support IS what we WANT. YES, it is. Read my old post about BTC's history of triple bottoming before moving on to a new formation.

DIGITAL ALPHA UPDATE - Warning, your head will explode, BTC

Note

I say "volume is still decreasing" because that is necessary for this pattern - meaning this trade is still active. Hope you are all enjoying your weekend!

- DA BULL

Note

Interesting support found - was previous resistance

Note

Everybody should always be reminded that money will move to where money can be made with the least amount of resistance... what do I mean by that? Well, we should all be reminded of the short squeeze:

Everybody and their great grandmother believed we were headed down. Shorts stacked up. Whales saw an opportunity to liquidate the shorts since there were so many. It was easy money.

I just want to remind you to never risk more than you are comfortable with. Just because this ABCDE formation is holding true, that does not mean market dynamics will change. They can change so quickly you'll find yourself in debt.

Trade active

We have arrived. What does this mean?! NOTHING! haha just kidding, well sort of. I want to remind everyone that this is a decisive point and even if we bounce here we are at no means in the clear. Symmetrical triangles are not always ABCDE...sometimes they are ABCD or have more than 5 touches. What this chart does is show where the decisive point is. The line in the sand is drawn for the bulls and the bears. Pick a side and be ready. If we bounce hard then we can wait for the next point which would be the upper resistance of the triangle. If we fall through the next point is -5% from the triangle (5% failures are very profitable trades). If we break the 5% mark get ready for the bottom.

Trade active

OK, we are still descending towards the support. Many folks think this is the bottom as we are at a previous support. I'm watching the white dotted line (shown below) to see if we get a rejection there. If so, we will most likely see the next resistance, 7k. I adjusted my support a little using 4hr candles, the support of the triangle coincides with 7k as well. Early I mentioned 5% failures for triangles...if that is the case and we do break to sub 7k prices, 6.6k (also another resistance level, magenta lines are resistances) will be on the radar. IF we bounce at this level sharply, we will most likely see a very profitable long opportunity. These are very exciting times and either triple bottoms (still considering), triangle reversal, or 5% failure triangle will yield new highs for BTC.

Trade active

This white line is still proving to be relevant...

Note

Trade active

The past two bounces off support progressed to the 0.618 fib level. That chart is shown below. The magenta lines will be the targets. IF this is a current low, we can expect a quick low, I usually take into consideration 5% for this. That is what you will see just below today's candle. Again, the white dashed line is proving relevant as a resistance still. Assuming we get the bounce off support and this formation is still valid, we will be looking at price moving to 0.5 fib ($8450) and/or 0.618 fib ($8750). I'm not as confident as I was on BTC breaking upwards (see post on "When Bottom" for details below), so the 0.5 fib level seems more appropriate conservatively.

Note

When Bottom:

Trade active

We are still plugging along here on this formation. We are about to test this resistance here. If we go through we can see 8k. If price tends to just traverse the line we would expect a breakout. The bounce is the only cautionary move here.

Trade active

Many analysts thought that was a bear rejection at the resistance. However, the way it found support leads me to believe we can be bullish through this resistance with the next attempt. The stoch RSI supports us on 1D, 4H, 1H, which is a good sign. Look to open longs here and when approaching resistance set your stop-loss at your entry...upon breakout, look to increase position and move stop-loss into profit.

Note

Quick question as I am sort of new to TView. Do people like me updating the trade here in this post, or would a new post be preferred? I ask because this thread is getting pretty long and don't want people to get bogged down in it...but on the same note, this formation is still active and this trade is active as long as we see this formation holding true. Please leave a note, thanks for reading as always!

-DA BULL

Trade active

Alllllllrrriiighhhttyyy then. Looks like BTC behaved as we thought. Broke resistance, then tested previous resistance as support. Many folks have lots of uncertainty on BTC at the moment. Here are my personal thoughts. Looks like a WXY pattern, which is good for the Bulls among us. It's a zig-zag (12345), running into a flat, then breaking out of an accumulation/abcde triangle. This is theoretical keep in mind and just helps us figure out where we might be in a pattern. It is tough when volume gets this low and the lack of liquidity in the market is not helping a bit. NOTE: Lots of Bullish news, but no Bullish move - that is important in terms of market sentiment. This typically means we are more bearish than bullish, which we can expect. Until we break out north of the blue dashed line and rest as support will we be bullish.

BTW, this post if for BM! He asked me to do an Elliot Wave on the current situation, so here ya go! Take it easy everyone.

Trade active

OK, everybody has appeared to throw the triangle meme out the window...no! Not yet! If anything, the trade might have gotten even more profitable. See chart below. The price failed to move more than 5% outside the pattern. IF, we see a reversal here, be prepared for a breakout on the upside. Typically, when we see a 5% failure for a triangle like this, another pattern might be in play as well...the triple bottom is what we find when looking. I have said several times that if we break on the downside less than 5%, there are several patterns still valid. The only discredited one is the WXY pattern outlined above.

So how to trade this? Wait for the reversal. Two ways. Very tight stop-loss here around 6.5k OR wait for price to uptick with some volume. Usually a 5% failure like this most successful in a bull market...we clearly are NOT in a bull market. We have had minimal negative news the past week and the first piece of negative news is tied to billions of dollars "wiped out" of crypto, HA! To me news reporters just try to justify their job...anywaysssss coming back to the trade. We need price to rise with the volume, which can be very likely here.

Trade active

Adjusted the lower support (blue dashed line) to coincide with daily closes. So we are now watching for the close around 6.2k. I'm a permaBULL at the moment so to me low leverage longs are the play...as positions turn green, move leverage up and add trailing stop-losses.

Note

OK, first off, thank you a_jimenezz for the little poke today to update this. I've been somewhat hesitant to post as this area has been very tricky to predict since this is where I saw a reversal happening. We still have not dipped below the triangle more than 5% (looking at daily closes), meaning our triangle formation is still in play. There is also a great wedge (shown in white) that is forming, I will go into that with the next photo. However, there are some bearish indications to take a look at. On this chart note the "1", "2", "3". These numbers reflect inflection points on the 200MA line. I've been attempting to crunch some historical data to spew you all some results. My grad adviser in econometrics would be shaking is head at me for how rusty I appear to be.

These numbers are in order 1: 200MA is increasing at an increasing rate, 2: increasing at a decreasing rate, 3: decreasing at an increasing rate. The fact we are now decreasing at an increasing rate frightens me. Additionally, looking at the VPVR (the columns on the right hand side of the screen) we can get a visual as to how much volume occurred within a certain price range. It is pretty nifty, but it has its fault. Obviously the longer the price stays in a certain range, the more volume is likely to occur. So always use this tool knowing that. However, I'm using it here to see potential low volume pits, and we have one between $5600 and $4400. Meaning, if price dipped below $5600, the historical volume is relatively low...so there is potential for price to move much faster through this area. Yikes.

My last two bearer of bear news tid bits is the volume graph at the bottom. With a glance of the eye you can notice that higher volumes happened during price drops - bearish sign. The last tid bit is the news itself. The news is loaded with bullish news and we still haven't seen any movement. Even Tether printed enough money to buy a small island, yet we've been sliding for the last day and a half.

Note

Descending Wedge being served up. So how is it shaping up...you guessed it, in a wedge shape...(crickets)

On this stretch we are in a nice little wedge formation. We have 3 touches on the resistance, 3 on the support. Volume has been on the decline until recently. These factors are supporting this formation. We did have a volume peak, which is necessary on a wedge breakout (typically occurs on last touch on support), but the volume dropped, leading towards a breakout failure. We had another support touch and have volume at a healthy level. We need to sustain this volume if we are going to see a breakout here. If we do we can expect fast price action to $6900 area (based on fib-trend lines) OR we will break, retest previous resistance as support, then be off towards that level - more likely if we break (which means this is a good time to open a position if you miss it).

On the MACD we are seeing the wedge formation confirmed. If we can break the upper white line, then we will see a successful breakout of the larger triangle formation. This isn't telling, but is not discrediting our formation.

Also, CMF is turning positive right when necessary for this.

Keep my previous post in mind (bearish talks) when looking at this here. This is a tough area to get right. If we bounce off resistance it might get ugly fast. However, if we just get a slight bounce, be prepared to see a breakout upwards.

Note

Lots of CME talk in regards to contracts expiring. The past several "last day of trade" didn't see much price action. Ignore the noise. Expect the wedge to continue.

Note

Follow this idea on a fresh new chart here:

Note

Let's end on a laugh...here is to the Camel Dump formation:

DIGITAL-ALPHA

Disclaimer

The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.