7 Keys to the Kingdom
Greetings fellow traders and investors
We are approaching the end of the much-debated triangle. Here I bring you the Key levels and formations to watch, as well as the explanation of why I have turned to a bullish view. To clarify, I'm no moon dreamer, and when we reached 13k, I was calling for 6k and bellow. I sustained that bearish outlook for quite some time, mostly because our rally to 13k was so ugly - it didn't look organic at all. When lots of people started turning bearish, I found reasoning to become bullish. There's quite a lot on this chart, but I will do my best to explain everything in an organized manner.
Follow the path with me, friend, and together we shall find the true pattern:
1 - The Descending Triangle (DT) (?): The majority of people base their bearish outlooks on the supposed DT (Purple solid lines, and dotted purple on the top as the bleeding border). I cannot entirely agree this is a bearish DT for two main reasons: A) The lower edge of the triangle is inclined by 4 degrees. That is not much and definitely doesn't turn it into an equilateral, but it's enough that now the border of the triangle is almost 5% away from the Main Pivot (MP ~9050). This angle makes for an ugly (unreliable) pattern at best. B) The weekly closures show a different shape, telling another story. If one were to draw the pattern based on weekly closure - one of the most significant values for long term trend analysis - they would instead find an ascending triangle (AT) (Teal and Red Lines), which typically is a beautiful bullish continuation pattern. Here is the perspective most people are ignoring:
. This view is the main reason I have discarded the DT and am calling it a false pattern. As you can see on the linked line chart, in 2018 the weekly closures showed a clear DT, now it's the opposite. The current moment looks more like an AT, very similar to the one we made in the long consolidation from 2015 ends until early 2016.
2 - 21EMA and 20 MA: By now, everyone should be familiar with the fact that BTC bounces from those during bullish trends. The discussion of which one is more important is endless - I'm not going to touch it. Right now, there's a big gap between them, with the 21EMA almost 500 points below the 20MA, representing the recent loss of bullish momentum. However, the most important to me is: they are both covering MP, and creeping inside and above the triangular borders. I cannot see HOW someone could be a convict bear on this market at this moment, without a weekly closure significantly bellow both those MAs. If you look back at early 2016 consolidation, you will see that price played around those MAs for weeks, and made mean wicks way bellow it (yes, there was a significant hack at that time that shook the market), and even closing some weeks marginally bellow the MAs. Still, despite all the uncertainty, MA's being constantly pierced, extremely long consolidation, in the end, early 2016 resulted in an AT, eventually breaking up. Yes, past performance is no guarantee of future developments. Nonetheless, we should not neglect these MAs.
3 - Fundamentals A (News): Crypto fundamentals, in general, continue to improve. We have big companies coming into the fold, with Santander issuing blockchain bonds eng.ambcrypto.com/santander-launches-first-end-to-end-blockchain-bond-to-issue-20-million-on-ethereums-blockchain/ , Zuckerberg personally pulling political strings to make Libra real cointelegraph.com/news/zuckerberg-dines-with-us-democrats-concerned-over-facebooks-libra , BTC slowly creeping back into mainstream media newsbtc.com/2019/08/02/largest-uk-newspaper-raises-dwindling-bitcoin-supply-to-millions-of-readers/ , and of course BAKKT just around the corner.
Fundamentals B (Halving and Hashrate): As everyone knows and should not forget BTC halving is approaching, but we should note that it's actually accelerating towards us. Hashrate is leaping higher, signalling that big investors and market makers expect the price to soar. By looking at the Hashrate graph cointelegraph.com/news/bitcoin-hash-rate-hits-102-quintillion-in-historic-network-milestone we can see that despite the sideways price and relative uncertainty on the market big investors have been investing heavily on mining power, with more mining power the Halving will come sooner than expected. Months ago the Halving was scheduled to happen around June, but if Hashrate continues the uptrend, it's more likely to occur in mid-April. Now, if the price remains around 10k, after the halving most mining operations would become unprofitable. Do you think big money would be invested in mining if these massive players did not believe the bull-market was confirmed? Let that sink in for a moment.
4 - Macro: Global economy has been slowing down, but central banks are not quite ready to allow it to go in reverse. Yesterday the FED cut rates by another 25 base points, which was not received with much excitement by the market, but, the most important is, there are clear signs that the FED will reinstall QE to hold the economy aloft ft.com/content/6c9f36e4-da22-11e9-8f9b-77216ebe1f17 , newsbtc.com/2019/09/19/bitcoin-price-rocket-fuel-trump-lambasts-federal-reserve-after-rate-cut/. Why is this important you may ask? Well, BTC has never seen a real bear market/crisis. So, although many hope BTC will become a safe haven asset, the immediate truth remains that right now BTC is a highly speculative asset, and such an asset class depends on a bull market extension to soar higher. The FED positioning seems to agree with the idea that we will have around two years of bull market extension, which would allow US elections to come and pass before the crisis become inevitable. This is a whole topic in itself, and I will not dive deeper into it. However, to put it simply: The FED has signalled that the era of cheap/free money will continue, and may come a day when rates could even be negative, forcing money out of banks. If credit is easy to come by, and it costs to keep money in the bank, where does money go? Speculative Assets.
The conclusion: Considering we have a battle between a dubious bearish pattern (DT) and a possible hidden bullish pattern(AT), we look at more data. The vast majority of information comprised of Fundamentals and Macro seems to indicate a bullish result. It's not perfect, and there's definitely much anxiety in the market - which is reasonable when you think that the decade long bullish run is losing steam, and we seem to be walking into a fragile bullish extension before a likely crisis. Moreover, with Bakkt entering the fold, we should see some turbulence. So now that we looked into WHAT we expect to happen let's speculate on the HOW.
5 - The Levels: I bring five levels of extreme importance at this moment: Red 11500 - This is our primary resistance, a bullish breakout will likely be confirmed only when we CLOSE a weekly candle above this level. Yellow 10950 - This is the first challenge, I expect the price to struggle a lot to break it and even more to hold it. We probably should see the weekly 21EMA tested before consistently holding above 10950. Green 9050 - This is the Main Pivot, for a bullish outcome we should not see weekly closing below it. White 8800 - This is probably the level of maximum pain; I expect that Stop Loss and liquidations are accumulated between 9000 and 8800. Blue 8450 - This is where many people want to buy - which is very odd to me, that people would want to buy soon after a bearish breakout - I don't expect us to see this level. In my experience, people don't usually get what they want. When we were at 3150 people wanted 3000/2500, they never got it. If we do go to Blue, I expect a strong bounce followed by failure and my view would likely turn bearish.
6 - The traps - I believe we are bound to see a sequence of malicious candles cleaning out SLs, trapping people, and liquidating those who are highly leveraged. We saw the first of such moves yesterday. There's no guarantee that these will happen as such, but beware of: A) The first move that soars above 10950 and or 11500, there's potential for a first bull-trap followed by a move lower before the real breakout. B) A move that pierces all the MAs and lower border of the triangle and heads towards 8800, this would be the ideal move to clear all leverages longs and trap sellers. C) Beware of the ABCDE count on this triangle - It looks legit, but triangles can easily be extended (ABCDEFG), also, the last wave of a triangle either E or G, usually undershoot or overshoot the border of the triangle.
7 - Timing: To predict when is even harder than how, but my take is this: The market will remain in this ranged consolidation, making traps and being a mix of tedious and dangerous until after Bakkt is running and CME March contracts are open. I think the next move will be a bull trap, and that a harder bear trap will follow it. I expect a real breakout to happen within a month.
Don't be greedy, don't panic, and you should be all right.
Remember - The price May, Could, or Should. It never Must.
Trading and Investing are works of probability; there are no certainties.
Farewell.
We are approaching the end of the much-debated triangle. Here I bring you the Key levels and formations to watch, as well as the explanation of why I have turned to a bullish view. To clarify, I'm no moon dreamer, and when we reached 13k, I was calling for 6k and bellow. I sustained that bearish outlook for quite some time, mostly because our rally to 13k was so ugly - it didn't look organic at all. When lots of people started turning bearish, I found reasoning to become bullish. There's quite a lot on this chart, but I will do my best to explain everything in an organized manner.
Follow the path with me, friend, and together we shall find the true pattern:
1 - The Descending Triangle (DT) (?): The majority of people base their bearish outlooks on the supposed DT (Purple solid lines, and dotted purple on the top as the bleeding border). I cannot entirely agree this is a bearish DT for two main reasons: A) The lower edge of the triangle is inclined by 4 degrees. That is not much and definitely doesn't turn it into an equilateral, but it's enough that now the border of the triangle is almost 5% away from the Main Pivot (MP ~9050). This angle makes for an ugly (unreliable) pattern at best. B) The weekly closures show a different shape, telling another story. If one were to draw the pattern based on weekly closure - one of the most significant values for long term trend analysis - they would instead find an ascending triangle (AT) (Teal and Red Lines), which typically is a beautiful bullish continuation pattern. Here is the perspective most people are ignoring:
2 - 21EMA and 20 MA: By now, everyone should be familiar with the fact that BTC bounces from those during bullish trends. The discussion of which one is more important is endless - I'm not going to touch it. Right now, there's a big gap between them, with the 21EMA almost 500 points below the 20MA, representing the recent loss of bullish momentum. However, the most important to me is: they are both covering MP, and creeping inside and above the triangular borders. I cannot see HOW someone could be a convict bear on this market at this moment, without a weekly closure significantly bellow both those MAs. If you look back at early 2016 consolidation, you will see that price played around those MAs for weeks, and made mean wicks way bellow it (yes, there was a significant hack at that time that shook the market), and even closing some weeks marginally bellow the MAs. Still, despite all the uncertainty, MA's being constantly pierced, extremely long consolidation, in the end, early 2016 resulted in an AT, eventually breaking up. Yes, past performance is no guarantee of future developments. Nonetheless, we should not neglect these MAs.
3 - Fundamentals A (News): Crypto fundamentals, in general, continue to improve. We have big companies coming into the fold, with Santander issuing blockchain bonds eng.ambcrypto.com/santander-launches-first-end-to-end-blockchain-bond-to-issue-20-million-on-ethereums-blockchain/ , Zuckerberg personally pulling political strings to make Libra real cointelegraph.com/news/zuckerberg-dines-with-us-democrats-concerned-over-facebooks-libra , BTC slowly creeping back into mainstream media newsbtc.com/2019/08/02/largest-uk-newspaper-raises-dwindling-bitcoin-supply-to-millions-of-readers/ , and of course BAKKT just around the corner.
Fundamentals B (Halving and Hashrate): As everyone knows and should not forget BTC halving is approaching, but we should note that it's actually accelerating towards us. Hashrate is leaping higher, signalling that big investors and market makers expect the price to soar. By looking at the Hashrate graph cointelegraph.com/news/bitcoin-hash-rate-hits-102-quintillion-in-historic-network-milestone we can see that despite the sideways price and relative uncertainty on the market big investors have been investing heavily on mining power, with more mining power the Halving will come sooner than expected. Months ago the Halving was scheduled to happen around June, but if Hashrate continues the uptrend, it's more likely to occur in mid-April. Now, if the price remains around 10k, after the halving most mining operations would become unprofitable. Do you think big money would be invested in mining if these massive players did not believe the bull-market was confirmed? Let that sink in for a moment.
4 - Macro: Global economy has been slowing down, but central banks are not quite ready to allow it to go in reverse. Yesterday the FED cut rates by another 25 base points, which was not received with much excitement by the market, but, the most important is, there are clear signs that the FED will reinstall QE to hold the economy aloft ft.com/content/6c9f36e4-da22-11e9-8f9b-77216ebe1f17 , newsbtc.com/2019/09/19/bitcoin-price-rocket-fuel-trump-lambasts-federal-reserve-after-rate-cut/. Why is this important you may ask? Well, BTC has never seen a real bear market/crisis. So, although many hope BTC will become a safe haven asset, the immediate truth remains that right now BTC is a highly speculative asset, and such an asset class depends on a bull market extension to soar higher. The FED positioning seems to agree with the idea that we will have around two years of bull market extension, which would allow US elections to come and pass before the crisis become inevitable. This is a whole topic in itself, and I will not dive deeper into it. However, to put it simply: The FED has signalled that the era of cheap/free money will continue, and may come a day when rates could even be negative, forcing money out of banks. If credit is easy to come by, and it costs to keep money in the bank, where does money go? Speculative Assets.
The conclusion: Considering we have a battle between a dubious bearish pattern (DT) and a possible hidden bullish pattern(AT), we look at more data. The vast majority of information comprised of Fundamentals and Macro seems to indicate a bullish result. It's not perfect, and there's definitely much anxiety in the market - which is reasonable when you think that the decade long bullish run is losing steam, and we seem to be walking into a fragile bullish extension before a likely crisis. Moreover, with Bakkt entering the fold, we should see some turbulence. So now that we looked into WHAT we expect to happen let's speculate on the HOW.
5 - The Levels: I bring five levels of extreme importance at this moment: Red 11500 - This is our primary resistance, a bullish breakout will likely be confirmed only when we CLOSE a weekly candle above this level. Yellow 10950 - This is the first challenge, I expect the price to struggle a lot to break it and even more to hold it. We probably should see the weekly 21EMA tested before consistently holding above 10950. Green 9050 - This is the Main Pivot, for a bullish outcome we should not see weekly closing below it. White 8800 - This is probably the level of maximum pain; I expect that Stop Loss and liquidations are accumulated between 9000 and 8800. Blue 8450 - This is where many people want to buy - which is very odd to me, that people would want to buy soon after a bearish breakout - I don't expect us to see this level. In my experience, people don't usually get what they want. When we were at 3150 people wanted 3000/2500, they never got it. If we do go to Blue, I expect a strong bounce followed by failure and my view would likely turn bearish.
6 - The traps - I believe we are bound to see a sequence of malicious candles cleaning out SLs, trapping people, and liquidating those who are highly leveraged. We saw the first of such moves yesterday. There's no guarantee that these will happen as such, but beware of: A) The first move that soars above 10950 and or 11500, there's potential for a first bull-trap followed by a move lower before the real breakout. B) A move that pierces all the MAs and lower border of the triangle and heads towards 8800, this would be the ideal move to clear all leverages longs and trap sellers. C) Beware of the ABCDE count on this triangle - It looks legit, but triangles can easily be extended (ABCDEFG), also, the last wave of a triangle either E or G, usually undershoot or overshoot the border of the triangle.
7 - Timing: To predict when is even harder than how, but my take is this: The market will remain in this ranged consolidation, making traps and being a mix of tedious and dangerous until after Bakkt is running and CME March contracts are open. I think the next move will be a bull trap, and that a harder bear trap will follow it. I expect a real breakout to happen within a month.
Don't be greedy, don't panic, and you should be all right.
Remember - The price May, Could, or Should. It never Must.
Trading and Investing are works of probability; there are no certainties.
Farewell.
免责声明
这些信息和出版物并不意味着也不构成TradingView提供或认可的金融、投资、交易或其它类型的建议或背书。请在使用条款阅读更多信息。