Further consolidation looking likely on BTC. Here’s why
Updated
As you can see in the chart above, we had a solid move to the upside before witnessing what is known as a volume climax where we saw a fast 15% drop in the price.
Many traders were expecting a bounce attempt to play out here but what has to be noted is the amount of bear volume that occurred during the volume climax AND the lack of bull volume that has followed.
First I will talk about a bounce, then outlay my trade plan.
I like to think of a bounce like this: *please note numbers used in these examples have just been made up on the spot and don’t represent true bounce percentages.
1 - if a ball drops 5 meters (5% = 5m) then we should expect to see a bounce upon hitting the bottom of about 2 meters (2%). If this happens, I see it as a healthy bounce as there was enough volume on the bounce to give it that healthy 2 meter jump.
2- if a ball drops 15 meters (15%) but we only see the ball bounce 2 meters (2%) then something doesn’t seem healthy and I would assume some gravitational force is pushing that ball down further.
At this point, bull volume seems insignificant to bear volume in the short term and when taking into account that we have sureynlost some long term buying momentum for now, I’d say we are set for a further leg down.
This isn’t a call to short sell the market (risky traders who short uptrends though may find this the perfect opportunity). But instead have your stop losses ready if you are stuck in positions, or just patiently sit out of the market if you are all cash.
We may not consolidate, we may consolidate for another day, week, month, nobody knows and as an experienced trader all I can do is let the charts indicate to me when pattern or trend changes are occurring.
As the 4hr uptrend is lost that will be my main guide for the short term for trend analysis, and I will also be keeping a close eye on volume as when we bottom we should expect to see the same as we saw up the top, a volume climax.
I will stay out of the market until a clear bottom plays out as at the moment I think we are looking bearish.
Don’t try and speculate too much in these markets as nobody (even your mentors) can call what will happen. Just read the charts, plan accordingly and most importantly, manage that risk!
Many traders were expecting a bounce attempt to play out here but what has to be noted is the amount of bear volume that occurred during the volume climax AND the lack of bull volume that has followed.
First I will talk about a bounce, then outlay my trade plan.
I like to think of a bounce like this: *please note numbers used in these examples have just been made up on the spot and don’t represent true bounce percentages.
1 - if a ball drops 5 meters (5% = 5m) then we should expect to see a bounce upon hitting the bottom of about 2 meters (2%). If this happens, I see it as a healthy bounce as there was enough volume on the bounce to give it that healthy 2 meter jump.
2- if a ball drops 15 meters (15%) but we only see the ball bounce 2 meters (2%) then something doesn’t seem healthy and I would assume some gravitational force is pushing that ball down further.
At this point, bull volume seems insignificant to bear volume in the short term and when taking into account that we have sureynlost some long term buying momentum for now, I’d say we are set for a further leg down.
This isn’t a call to short sell the market (risky traders who short uptrends though may find this the perfect opportunity). But instead have your stop losses ready if you are stuck in positions, or just patiently sit out of the market if you are all cash.
We may not consolidate, we may consolidate for another day, week, month, nobody knows and as an experienced trader all I can do is let the charts indicate to me when pattern or trend changes are occurring.
As the 4hr uptrend is lost that will be my main guide for the short term for trend analysis, and I will also be keeping a close eye on volume as when we bottom we should expect to see the same as we saw up the top, a volume climax.
I will stay out of the market until a clear bottom plays out as at the moment I think we are looking bearish.
Don’t try and speculate too much in these markets as nobody (even your mentors) can call what will happen. Just read the charts, plan accordingly and most importantly, manage that risk!
Note
For some reason my chart is all weird in this picture so you can’t use a lot of it as a reference. But I hope this info is still useful.
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.