BTC - Similarities in Mt. Gox
Updated
So first of all, let me get this out of the way. This is not to build FUD. This is just to show similarities in the two major Bitcoin drops of all time. I'm not using elliot wave analysis on this, but just price action and indicators. I'm using these comparisons to see if we can break the trend of the first drop. But I'm using it as a reference to see how we respond to these certain levels according to our indicators. Let me explain what I'm looking at here and what similarities that I'm finding.
I'm paying attention to the movements and shapes of the price action on the weekly/daily chart (This is the weekly) of the Mt. Gox drop and am comparing it to what we are finding here.
With similarities in price movement, I compare the peaks to the hillsides and the projected valleys. Though the weekly view does not show the exact prices, I checked daily prices to get rough estimates on price.
M2 (YELLOW):
We notice that after reaching our high on 2014, we find a vicious sell off to a 69% retrace (or 31% of the previous high over the course of several weeks. Currently, we are finding ourselves in the same situation, with my most recent prediction showing that we should hit $5-5.3k within the next week. If that holds true then it would result in a retrace of 73% (or 27% of the previous high at 19.7k).
M1 (WHITE):
Well, we notice that in 2014 we strike resistance at 55% of the previous high before it hits M2. Then after M2 is hit, we test the white resistance line again and fail to break it at $657. Well, let's take a look at where we are now. Notice that we already found resistance around that level at 59%, $11,700. That is the region where I'm looking to see if we can break through convincingly.
Low (RED):
Once BTC failed to break from M1 in 2014, it struck back down to only 15% of the total value of its previous high at $175. Let's just SAY we fail to break through our current M1, then its possible we can see a new low at 15-19% of our high at 19.7k which would end at $3,000 or a tad bit higher.
RSI:
If we begin to fall through later in the year and find resistance at 44 RSI, then I'd expect a very bad outcome for the year, in terms of hitting 3k. We need to stay above 40 RSI in order to keep bullishness within the market.
Stoch RSI:
This is what ties the knots together for me. You could argue that the price action around M1 is pretty different because we've already tested that resistance twice. And that is a very solid argument. But the only thing that creates confrontation in terms of that idea is that our Stoch RSI is showing a ton of similarity between the two points (Mt. Gox & Where we are now).
MACD:
The MACD isn't shown here. But I want you all to look at the weekly MACD. The MACD is STILL overbought. However, the Histogram is begging for bullish divergence. That's why after we hit 5k I am certainly turning bullish and would aim for the previous swing high at 11.7k before I look to take profits. But, it shows that because we'd still be overbought - that we'd still need more correcting to do.
Elliot Wave Count:
This is also not on here. But by this point, I think it's necessary to change the count to this being the cycle wave 4. I need a chart that goes back to the BEGINNING of Bitcoin in like 2009 to confirm, until then, I couldn't precisely tell you all. But if this is cycle 4, then a correction for the remaining of 2018 definitely sounds plausible.
At This Point:
At this point, there is no reason for the price of Bitcoin to hit all time highs. Yes, we can get some nice swing reversals, BUT, we must recognize that there needs to be a fundamental driver to get this going. The Bears have full control, and we must recognize that until momentum kicks in.
I'm paying attention to the movements and shapes of the price action on the weekly/daily chart (This is the weekly) of the Mt. Gox drop and am comparing it to what we are finding here.
With similarities in price movement, I compare the peaks to the hillsides and the projected valleys. Though the weekly view does not show the exact prices, I checked daily prices to get rough estimates on price.
M2 (YELLOW):
We notice that after reaching our high on 2014, we find a vicious sell off to a 69% retrace (or 31% of the previous high over the course of several weeks. Currently, we are finding ourselves in the same situation, with my most recent prediction showing that we should hit $5-5.3k within the next week. If that holds true then it would result in a retrace of 73% (or 27% of the previous high at 19.7k).
M1 (WHITE):
Well, we notice that in 2014 we strike resistance at 55% of the previous high before it hits M2. Then after M2 is hit, we test the white resistance line again and fail to break it at $657. Well, let's take a look at where we are now. Notice that we already found resistance around that level at 59%, $11,700. That is the region where I'm looking to see if we can break through convincingly.
Low (RED):
Once BTC failed to break from M1 in 2014, it struck back down to only 15% of the total value of its previous high at $175. Let's just SAY we fail to break through our current M1, then its possible we can see a new low at 15-19% of our high at 19.7k which would end at $3,000 or a tad bit higher.
RSI:
If we begin to fall through later in the year and find resistance at 44 RSI, then I'd expect a very bad outcome for the year, in terms of hitting 3k. We need to stay above 40 RSI in order to keep bullishness within the market.
Stoch RSI:
This is what ties the knots together for me. You could argue that the price action around M1 is pretty different because we've already tested that resistance twice. And that is a very solid argument. But the only thing that creates confrontation in terms of that idea is that our Stoch RSI is showing a ton of similarity between the two points (Mt. Gox & Where we are now).
MACD:
The MACD isn't shown here. But I want you all to look at the weekly MACD. The MACD is STILL overbought. However, the Histogram is begging for bullish divergence. That's why after we hit 5k I am certainly turning bullish and would aim for the previous swing high at 11.7k before I look to take profits. But, it shows that because we'd still be overbought - that we'd still need more correcting to do.
Elliot Wave Count:
This is also not on here. But by this point, I think it's necessary to change the count to this being the cycle wave 4. I need a chart that goes back to the BEGINNING of Bitcoin in like 2009 to confirm, until then, I couldn't precisely tell you all. But if this is cycle 4, then a correction for the remaining of 2018 definitely sounds plausible.
At This Point:
At this point, there is no reason for the price of Bitcoin to hit all time highs. Yes, we can get some nice swing reversals, BUT, we must recognize that there needs to be a fundamental driver to get this going. The Bears have full control, and we must recognize that until momentum kicks in.
Note
We have NOT hit the bottom. By this point in the correction, you want to know when we do? It is when people give up. When people are in despair. When the weak hands are washed out. When the people we bought in November, December officially give up. When people lose faith. When people can't take it anymore. People are expecting it to hit 5k. I see it ALL the time on social media. But you know what people aren't expecting or WANTING to happen? A hit at 3k. By then people will flip out, take losses, and wait for the price to go up again before they regain faith.Personally, my allocation in this market has been VERY limited. I haven't liked any of the risk opportunity in this market for the past few months. BUT, if you are in this market, you are here because you believe in it. And if you are here for purely profit, then you should have been making several trades, because "HODL" hasn't made much money in the past few months. Just being real. But I believe that in the long run, HODL will not hurt you, it will benefit you. That is just what I BELIEVE, right? If you are a long-term investor, just hold on dude. This is why you only invest a small portion of your overall portfolio into crypto, and you FORGET about it (if you are an investor). If you are a hodlr, then don't freaking look at the price. There's no reason to. Literally. Hold that bitch and come back in 2020 to see how its doing.
If 3k scares you, then go home. This game is for big boys. But, again, this is only comparison. It doesn't mean I automatically think this will happen. I expect a very big reversal soon, but I'm looking for signs of ANOTHER bearish reversal. Until I see those signs, then I'll start to consider this as an option.
For now, all we worry about is hitting 5k and bouncing heavily from there.
Note
Learned how to use this tool today. Here is a version where we are moving 1.5 faster than Mt. Gox, and the similarities are strikingly similar.
Note
"similarities are strikingly similar." LOL
Here is the alternate, that shows to have FAR less correlation to the first pic. However, it is still a good way to look at it, since larger corrections of the same cycle correction tend to have similar consolidation periods.
Note
Is anyone familiar with a theory that covers this? This is a pattern that i've been pretty familiar with over a long time of covering TA and it works pretty well when properly applied. If there is no theory that covers this, I may look into the works of publishing something in depth that covers this. It's always worked pretty well on higher time frames, even hourly timeframes. But I want to note how we are indeed coming to an end to this downside correction (as we all know). This MACD crossover (theory) would imply that my wave count is pretty correct in terms of this "Z" wave being over.
Even though the first updated image of the comparison between the two drops are more correlated. This, AND the weekly Stoch RSI would support an uptrend to at least 10k. Which would coincide with the second update. I'm looking at possible 100% gains here after this next drop.
Note
Here is a side by side. Even though I don't believe we are going to get that expected drop, everything else is proving to be even more accurate to what happened in the previous correction of 2014. We should break the main resistance here soon. And because we are overbought on the Stoch, we should spend a day or two retracing back down to the .618 region at $7250-7300.
The lows before the downtrend resistance was broken are right between 30-31% of the previous high on both charts. Once we correct from this bull run, we should be able to target the swing high of $11,200! Again, I apologize for the mistake on the previous analysis, I should have picked up on this, but I was not expecting that bullish of a rally. But because we rallied like that, it can now give some more backbone to this similarities chart. So many things are similar here, but that doesn't mean they are guaranteed. I'm bullish for the next several weeks. But, I can't expect it to continue for the rest of the year. Next up is the weekly chart.
Note
Weekly chart indicators. The green box on the Stoch RSI is where we are now. Where we break the resistance, retest it, consolidate and take off to the next level. We should find resistance at the 61 RSI level on the weekly. That is the neutral territory. A break above $11,700 would signal a strong bullish rally.
Note
Update. So far we are on track. It's a little hard to tell exactly where we would be at. If we break through $11,700 then I'll turn a bit bullish. But an important thing to note is that a crossover of the 55 EMA doesn't guarantee that we head higher (as depicted in the 2014 correction). According to the weekly chart, everything that I thought would happen - is in fact happening. It's just happening at a faster rate. There is no real reason as to why we are rebounding right now. Which is why I'm skeptical on the entire market as a whole. I do not believe we've found the bottom yet.
Note
Do you guys see this? Believe it or not, I drew the yellow dotted line before I copied this chart over. But as you can see, if we reach this $10,500 target then we a susceptible to falling back down based on historical trends. We have done nothing yet that has made me bullish for the whole year of 2018. Stay on your heels. After this run is done, it will tell us everything.
Note
I wanted to talk about the EMAs here. But first I want to make sure that we all understand that there is no possible way we can form a head and shoulders from this day chart. IF you ever see an analysis saying that we are forming them, ban them from tradingview. LOL, no just kidding.
But seriously, here are some rules for the H&S pattern:
1) The head is always the peak (of an upright H&S) or the valley (of an inverse H&S)
2) The shoulder CANNOT come to a further extent of the shoulder
3) The head and shoudlers is not valid until the neckline is broken
Upright H&S connect:
- The 3-4-5 of impulse wave to the ABC corrective waves
- The 3-4 would make the left shoulder
- The B-C would make the right shoulder
- The 4-5-A would make the head
Inverse H&S usually connect:
- The ABC subwaves of a corrective wave to the 1-2-3 of impulse waves
- The A-B would make the left shoulder
- The 2-3 would make the right shoulder
- The B-C-1 would make the head
If you are unfamiliar with elliot waves. Please look at my educational post. I still do not have an educational post for corrective waves. But that will be coming during the summer as promised.
Note
The importance of the last update is that if we do break that resistance, it means absolutely nothing. It does not give us validation for the continuation of the uptrend.Note
Right now, I am leaning towards the bearish EMA trend. All I think this is a break to the downtrend. I really don't think we are finding true support, and eventually we break back down below. BUT, if we manage to constantly bounce off, then I'll have to take it as bullishness. One thing to consider here is that if we do break below this gathering, then the 100 and 200 EMAs (white and yellow) would be more likely to cross. If we get that crossover, then you can say goodbye for another uptrend until 2019!
Note
Here is the weekly chart.
Note
Remember what I had said with the pattern of the MACD rolling over (look at the update from April 8th on this thread). Very rarely when we get the large rollover do we go directly to the uptrend. It usually rolls over a few times in a descending pattern. This directly shows to me that we have more correcting to do.
As mentioned before on the update above, we are still overbought on the weekly.. It is likely that we go back down to reset the indicators.
I hate to be so bearish right now, because I do need to be as neutral as possible. But I'm not finding convincing factors that would roll us up to new highs. We are in a cycle wave 4. Cycle corrective waves in Crypto are not very quick, based on the last one. they take roughly a year to a year and a half to finish. However, when this correction finishes, it's possible we could reach some ridiculous heights based on historical extrapolation. I do not want to release that TA now, but eventually I will. It's almost kind of funny how ridiculous it is, but it does actually need to be taken seriously. I'm not going to say what the target price is... but it would be up there based on the TA.
Okay, that concludes my progress report for the larger scale of this correction. I'll come back to this when necessary. Remember that when I make these large scale reports, they remain valid until I upload a new large-scale report that contradicts the previous. Lower-time frame posts do not invalidate these larger scale reports. They are just breaking progress down on a smaller scale. So it's important to already remember what the bigger picture is. Just because I create a long/short post, does not mean I throw away this idea.
I have also made other larger-scale posts, that this one pretty much invalidates. So I no longer refer back to those. This is my main technical analysis for Bitcoin, and what I think is going to happen. Until I create a new post (based on major market moves that change my bias, then this one will continue to be the main count). I just wanted to clarify that so we are not confused.
Note
Again. This is still a pre-mature analysis. But volume is still a concern. Volume should be increasing into the strength of the trend. You see where volume has been increasing? On the downtrends, decreasing on uptrends. The OBV indicator is obviously showing the bearish divergence and weakness of the uptrend. Highly doubt we reach 11.7k on this run. The run is likely to be over now.
Note
twitter.com/CryptoEBall/status/995854104806256640Updated options for BTC to follow. Again, these are premature, and I expect things to slightly change. But these 4 options are the most valid and reliable I can come up with with this year.
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