Double, Double Toil and Trouble….
The narrative of 2017, although it doubled more than once, now in 2018 we do seem to be in a bit of trouble……. Some ramblings of a crypto junkie.
The latest events have not come as a surprise to me with the lower- highs trend confirmed once again, FUD or whatever conspiracy theory you like, the chart says it all, the downtrend remains intact, here is what I’m talking about if you haven’t seen it yet;
BTC 1D Chart — Lower highs being formed throughout the year
I therefore feel $5800 — $6000 looks the most likely destination to test the floor of our descending triangle once more, the question we have is will it hold? If it does we still have a play here but it has to be carefully constructed. Descending triangles are bearish in nature there is no getting around that fact, traders will always be looking for the downside break, see below;
Source; http://www.mysmartrend.com/technical-analysis-chart-patterns/triangles
Here is another way it could be approached;
It doesn’t have to go against us — but its definitely not looking great!
Now let’s put a different hat on because whilst it would be fantastic to hope we have bottomed on this $6000 floor that might not actually be the case and hope is not really a very good strategy.
A capitulation event, in my humble opinion, hasn’t occurred yet to set a true bottom to this bear, I’m talking about market sentiment that hears the longstanding crypto crowd say;
“well that’s the market f***ed, the haters were right, Bitcoin is going to zero”
It’s going to sound sadistic but as a trader I want to hear that said with conviction just as much as the other end of the spectrum where you get the taxi driver telling you where to put your retirement fund. We can use these as triggers, in conjunction with the TA, as both ends of the spectrum from human emotions are good for traders to stay in tune with, they let you know when euphoria and exuberance has replaced rational thinking and also to signpost when the storm surge has hit its peak.
“The Oracle of Omaha” — Warren Buffett…..he is not a big fan!
A panic sell-off with a break of support (our ~$6000 floor) would lead to that I think. Looking at some longer term charts on log scale, will also give you a better perspective of how over extended, at even these levels, we are and how much back-fill room is actually available. ( @savetheanimals from etoro planted this seed in my thinking)
I feel there seems to be far too much optimism in the market still and far too many people getting excited about small pumps, recognizing we are in a bear market, jumping on the back of weak rallies and becoming rocket men again is not going to create value, this is what I’m looking at;
BTCUSD 1M Chart — I hope that puts some perspective on things.
“Our favorite holding period is forever” — Warren Buffett
I’ll stick by this sentiment — It’s a waiting game as always.
I have been developing a weekly view for the best part of this year and whilst there is not much on my chart its mainly because I’ve spent most of my time taking things off of it.
There seems to be a lot of missing information between my trend lines and whilst that’s not necessarily a problem it is unusual that an asset can have areas like this that have not had levels set and tested, this could be due to Bitcoins lack of maturity or the shear momentum seen in 2017, but simply put it seems like data is missing which really doesn’t aid the longer term view and neither does it add any confidence that these levels are left behind in the past never to be seen again.
I see supports/targets at $5800-$6000, $5000 (I’ve been calling this one for a while now in my Discord group “Coinsheet”), $3000 and way down towards $1500 — $1300. Going below this would definitely leave my head spinning but until then I am not worried in the slightest about the future of both the technology or of Bitcoin itself.
Earlier in the year I posted this:
BTC 1W — Ichimoku Chart with Resistant/Support Trends
The feedback that I took from it was that most people were seeing $3000 as a buying opportunity, not an exit price so that gives me some hope that the lower levels I have identified will not be reached but I refuse to ignore them as possibilities. I do have mixed feelings still but because this space has progressed at a fast pace investors that would have simply dumped out of the market this time last year now have more opportunities available to hedge their risks which means they don’t simply have to exit the market, new products/exchange offerings give options.
What is worth keeping in mind is that this market is very young, we have seen a glimpse of the potential it has throughout 2017, let’s face it, with a bit of “dumb” money in play, the expectation is set firm in the minds of everyone that we hear screaming for “Lambos on the moon”, the market simply needs a reset after getting too hot. It can climb higher than you could ever imagine but therein lies our conundrum the bears need to have their “Lambo” moment and feel the euphoria too. Where there is money to be made any support you feel is out of reach, I can assure you is not and any target you set for profit taking might well pail into significance once Bitcoins full potential is realized.
Now then something different to the doom and gloom, a break of the previous high of $8500 (which is still possible) would get my nether regions itching, get past $11500 (top of the huge red Kumo on the weekly Ichimoku chart) and that’s the money shot.
“It is important to expect nothing, to take every experience, including the negative ones, as merely steps on the path, and to proceed.” — Ram Dass
There is however reason to be grateful for this slump in the market, this is an opportunity to watch a market cycle unwind in a fraction of the time it takes in traditional markets, NASDQ U.S Equity and Options are open for around 2305 hours this year open from 9:30 am to 4:00 pm with ( holidays and 3 days of closing at 1:00 pm meaning this year they will be open for 2305 hours. Crypto is 24/7 meaning they will be open for 8760 hours in 2018. That’s roughly 3.8 times more.
That’s a fantastic fast track education.
Thanks to Cointify Telegram — Blockchain & CryptoCurrency for the market comparison
I’ve been trading for just over 4 years and I can say hand on heart that I’ve learnt more in the last 8 months than the previous 3 years combined.
I’m not going to lie, it’s been painful and not very enjoyable at times, but I am optimistic of what the future holds.
Thanks to all those that have influenced my thinking over the past few months.
Special mention to Dan Jeffries (authour, engineer and serial entrepreneur) for shaping me into a better thinker and @savetheanimals https://etoro.tw/2oT81tp (etoro trader and blockchain enthusiast) who has provided a perspective on the market that has helped reinforce my own views in a space where there is little room for contradiction.
The claps feed my ego, so naturally I want as many as I can get ;-)
The objective of the above is to offer opinion and needless to say any decisions you make off the back of this article should be your own. I am not a financial adviser and neither do I want to be. Play safe in the market and protect capital at all costs otherwise you will find yourself very quickly watching from the sidelines instead of participating.