BTCUSD: Futures Coming. Forget Opinions, Watch For Reversals.

2017年12月10日

BTCUSD update: 12761 low reached and retrace in progress. In this analysis I am going to further explain what levels to watch for and what kind of behavior to anticipate. Once the futures open, let go of your opinions and be ready for anything.

The 12670 area is the .382 support measured from the 5400 low. Why 5400? Because it is the bottom of a very large swing. I wrote about this level in my previous report. At the moment, this market is showing a minor corrective structure with a lower high established at 16,300. Lower highs often lead to lower lows. The question now is will the current bullish effort break this bearish three leg formation and head for new highs?

The 14430 minor resistance has been cleared which is a sign of momentum change back to bullish, but this is not a buy signal.
The structure to wait for after this break is a retrace that either 1. forms and higher low around the 13719 to 13315 area (.618 of current bullish swing) or 2. forms a double bottom off the 12700 area. Also it is very possible that this market can go slightly lower, into the reversal zone which has a lower boundary of 11600. This is a higher probability area where price can reverse back up quickly. The key is WAITING for these formations, not assuming they will unfold. Even though there are limitless combinations and scenarios that can happen, by narrowing your decision making to a limited number of scenarios that offer higher probability is the basic foundation of a trading plan.

IF price falls below 11600, then momentum can take this market back into the next relevant support zone which is the 9891 to 7923 area (.618 of bullish structure from 5400 low). That would be the next area to look for stability before taking any new swing trades on the long side.

As far as shorts go, the levels to watch for are the 15480 to 16240 zone which is the .618 resistance of the recent corrective structure. Waiting for reversal structures here is very important because since this market is generally bullish, this resistance is more likely to break. Beyond this area I would be looking for a double top or a slightly higher high followed by a reversal candle. Shorting this market offers opportunity only if you are nimble, and know how to take profits early. I say this over and over, if you are trading without a specific plan, especially for shorting, you are asking for trouble.

Once the futures open, I do not think the reaction will be immediate. There may be an initial surge, but the volume probably won't be significant until tomorrow during regular U.S. business hours.

In summary, if I am going to buy into this market, it has to be near the supports evaluated in this report, and there has to be a supportive formation where the risk can be clearly defined. And until the futures take hold, I would rather stay out and let the market tell me what is more likely to happen. Like I said before, our opinions mean nothing in the eyes of the market. As a short term trader, our focus is momentum and what is happening now compared to what just happened, in order to get a glimpse of what can happen next and then measuring risk. If you insist on buying into this market, at least wait for a higher low, or retest of the the relevant support followed by a reversal formation, because those are the areas where reward/risk is not only better defined, but also the most attractive. As this market enters reality, there will be plenty of opportunities both long and short, but as more competition enters, more skill will be required for success over the long run.

Comments and questions welcome.