BTCUSD: Price pushes off of 7605, touches 8604 in a matter of hours, BUT it did not close strong. This price action is apparent across the board and for me means ones thing: bulls are not in control, yet. The next scenario that I am anticipating is a failed low formation which needs to unfold above 7401 if buyers are to return and initiate the next bullish leg.
All eyes are on this market. ETH and LTC are pretty much following this lead. Buying activity appeared at a very attractive support area BUT like I wrote about in my previous report, strong closes are required in order to prove that there is follow through. When indecisive or weak closes appear instead, that means the bearish momentum is still intact. That also means lower prices are a much higher probability.
The question is, how much lower? That is where the current location and price structure come into play. Price is now within the 8171 to 7239 minor support zone (.618 of recent bullish swing) which is also overlapping the broad 8174 to 4983 major support area (.618 area of entire bullish structure). I have been writing about this overlapping support area for weeks. Trading within a support area is an important piece of information to know, but not necessarily enough to buy into.
Within the minor support zone, there are two reversal zone boundaries that are important to note. Reversal zones are areas that are proportionate to a low or high point where price is most likely to reverse. If a fake out is going to happen, that is most often where it happens. In this case. 7776 and 7401 which overlap the 8171 to 7239 support zone are the lower boundaries of two reversal zones relative to the 8342 and 7665 lows respectively. That is why even though price is still controlled by bearish momentum, it still has a chance to reverse.
Right now in order to prove that bullish momentum is returning, price needs to reverse from where it is and break above 8200. Until that happens, this market is likely to continue lower, even beyond the reversal zones as long as momentum stays bearish. That is why it is more conservative to bet on the proof of the reversal (follow through) than a reversal attempt (pin bar alone).
In summary, if you took the recent pin bar long (there was a great signal posted on other site), it hit its short term target within the same day, but if you held onto it looking for a broader move higher, the fact that the next close after the pin bar was not strong was a clear sign that you should either get out, or sit on what you have and see if the failed low scenario plays out (which is much more risky). It all depends on what your goal is: short term or long term. I am still managing a position trade long, and holding for the next broad move higher. IF the reversal zones do not hold up, it means I will have to take more pain which I am willing to do. I have the long term perspective and recognize that these low prices in general are a buying opportunity. As long as the original premise and underlying technology maintain their relevance, these persistent sell offs offer better prices to buy.
Questions and comments welcome and see explanation of the recent trade on SC.
Here is my take, I believe it is very simple. The 76.4 fib level is a classic Wave II target and we're heading perfectly for it. It also matches the 'return to mean' line that some observe in a classical bubble. I believe we will be there towards the end of April, and then have sufficiently cooled off to have a run even greater than 2017.
El_Crypto_Ball
⋅
wow - nice call on the bottom of today's price action.
sumastardon
⋅
Alternative strategy for experienced day traders only, Sunday Trades
mrbrown66
⋅
Sorry Marc I have always enjoyed your TA but cant you see that this is the bubble bursting? We've had the parabolic rise in December followed by a massive retrace from the ATH. We are now below the 200 EMA and the bears are controlling this market. Sure we might see some bear flags and minor rallys but its game over for now until we bottom.
anon541
⋅
@mrbrown66, I have to agree. (Also, about the fact that I love your TA Marc).
But tens & hundreds of billions have left the market. Why would smart money and whales leave the market if we're reversing to the moon.
It makes sense for me that, market makers are grinding out as much money as possible on the way down with these bounces, driving volatility to a bottom, in order to accumulate.
If I was smart money, with the ability to make the market, that's what I'd be do8ng.