BTCUSD: Triangle Confirmed. Which Way To Break?

2017年12月29日

BTCUSD update: Lower high established at 15131 which sets up this market for a possible retest of the 12ks or maybe even lower. It also confirms a broader triangle formation.

Lower highs often lead to lower lows. It is not a guarantee, but an increased possibility. The 14400 resistance level continues to be tested, but there is a bearish outside bar that has been established which is a notable sign of weakness. If price continues to follow the bearish scenario, the 11600 and 10700 levels are the nearest reference points that would serve as reasonable targets at least for a retest.

What stands in the way is the 13269 to 12581 support zone which is the .618 of the previous bullish swing. It is possible (but less likely) that price can produce a failed low (double bottom variation) within this zone. There is initial buying in this area off of the 13145 level. What makes this scenario less likely is the fact that price is coming from a lower high, but none the less, it doesn't hurt to be aware of the possibility of a momentum reversal in this area. IF the market chooses to unfold this way, it can negate the current short term bearish momentum that appears to be taking hold. Also any push beyond the 15131 high will also cancel out the current bearish momentum as well. Just something to be aware of.

The development of the current lower high also confirms a broader price consolidation or triangle. A bullish breakout (which would coincide with the 15131 break) would also negate the lower high formation. The worst place to enter a market is in the middle of a triangle because this is where price action is the most random. If the bullish trend is going to reassert itself, waiting for the triangle breakout out would at least signal further bullish momentum and a reference point to measure risk from.

So how is this information useful? We are simply examining possibilities. There is no precision in any financial market. The purpose of having a perspective is to select and highlight the more probable scenarios out of infinite possibilities (reducing randomness). This is why TA is so effective on the shorter time horizons. It also helps us capitalize on the natural "gut instinct" decisions of the herd.

In summary, ANYTHING can happen. Expecting absolutes in a financial market is how you set yourself up to donate to the participants who anticipate probabilities and adjust with the order flow. In terms of my plan, I am looking for a good price to buy and this information helps me recognize not only when the reward/risk is most/least attractive, but also when other factors like momentum are in my favor. At the moment, price structure and momentum do not fit my criteria, even for a smaller long term position. The market needs to show its hand, and for me, that means either a retest of the 12K area or below, or a breakout beyond 15131. Those are the events I am waiting for before I can take any other action. Use this information within the confines of YOUR trading plan. If you don't have one, then you really should avoid these markets all together until you organize some kind of decision making process.

Comments and questions welcome.