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Bitcoin Price Analysis: Bitcoin’s All-Time High Tests a Historic Reversal Point

November 7, 2017 Bitcoin Schmitcoin 0

Bitcoin Price Analysis

For months on end, BTC-USD had a strong bullish rally that has been well confined between both a linear ascending channel and (on a macro scale) a parabolic curve:

Figure_1 (18).JPGFigure 1: BTC-USD, 1-Day Candles, Linear and Parabolic Trendlines

After a very strong, bullish rally, bitcoin managed to settle on a new all-time high in the $7,500s. This price peak bounced right off the upper linear ascending trendline shown in Figure 1. Historically, every time bitcoin has touched the upper ascending trendline, the market has gone through a corrective phase and entered into a relatively strong bearish reversal. At the time of this article, bitcoin is currently testing key, macro support of the lower $7,000 price range:

Figure_2 (15).JPGFigure 2: BTC-USD, 1-Hour Candles, Macro Support

The 23% Fibonacci support has been a point of interest in the market’s history and will prove to be strong support. BTC-USD has attempted to break this support level a couple of times already and we are currently making a third test. A break below this level of support could send the price down to the 38% retracement values and test the $6,700 prices. However, if we look at the previous price action (the red circle) that brought the price upward, we don’t see any consolidation or support in the market’s history. This tells us that the 38% price level most likely won’t prove to be significant support during a potential move downward and we can expect to find stronger support in lower values around the $6,400–$6,500 prices.

Historically, during correction periods, bitcoin has retraced 50–61% of the initial bull run:

Figure_3 (14).JPGFigure 3: BTC-USD, 12-Hour Candles, Retracement Trend

The 50–61% retracement trend has formed a very nice, consistent ascending trendline for the lower support values. Unfortunately in this case, a retracement to the lower trendline would shove us outside the parabolic envelope described in the last bitcoin market analysis. On a macro level, if we do continue on a macro retracement to the 50–61% retracement values, we will likely find support on the lower parabolic curve in the $5,300s.

Overall, bitcoin appears to be experiencing a slow bleed and will likely continue until some buying pressure picks up on the market. In general, the bullish pressure is somewhat exhausted, and if there is a resumption of an uptrend, we will likely see support and bullish continuation off the 23% retracement and $6,500 values outlined in Figure 3.

Right now, bitcoin is in a precarious situation because it’s sitting just above support at the $7,000 level and doesn’t appear to have any interest in climbing back up just yet. Keep an eye on this support level and watch for a rise in volume on the next test of support. If we break this support level, it’s likely to continue downward for several hundred dollars before finding support once again.

Summary:

  1. Bitcoin topped out its all-time high at the upper boundary of a macro, linear trendline.

  2. Historically, a test of this trendline has prompted a market correction — it is likely that this trend will continue.

  3. We are testing key support at the $7,000 price level and a move below this support will signal a continuation of the down trend.

Trading and investing in digital assets like bitcoin and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.

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Bitcoin Price Analysis: Bitcoin’s Parabolic Envelope Could Push to $8000s

November 2, 2017 Bitcoin Schmitcoin 0

Bitcoin Price Analysis

Bitcoin has had a quite a year thus far, to say the least. A 10x return since the beginning of the year has put bitcoin on a parabolic growth path that is testing the limits of this 2-year long bull market:

Figure_1 (17).JPGFigure 1: BTC-USD, 3-Day Candles, Parabolic Growth Envelope

The gains have been incredible for those trading bitcoin for the last couple years, and it appears that this parabolic envelope is coming to a close. In order for this bull market to remain viable, it will need to keep up on a very aggressive, parabolic growth path that has the immediate upper resistance at between $8,000 – $9,000. Similarly, the lower support is around $5,800.

A break of either the support or resistance will put bitcoin in a very precarious position. If bitcoin breaks the upper, parabolic resistance trend and manages to find support on the trendline, this could signal an entirely new bull market. However, if bitcoin breaks the lower support, this would send a very, very bearish signal to traders, indicating a breakdown of the 2-year long bull market.

Given the trend we have seen over the last two years, it would not be at all surprising to see a test of the $8,000s before any sort of market correction (micro or macro) takes place. We are on a very aggressive growth path and, on a macro-scale, one that has has shown a consistent trend of testing the upper curve prior to correction.

This is a very strong bull market and it it should not be underestimated. However, in an effort to remain objective, it’s important to present the not-so-obvious argument and state the consequences of a disruption of this macro bull market.

Figure_2 (14).JPGFigure 2: BTC-USD, 1-Day candles, Retests of Previous All-time Highs

Throughout the life of this parabolic run, bitcoin has shown a penchant for retests during market pullbacks. We can see in the image above that every time the market peaks the upper resistance curve, it has pulled back to retest the previous all-time high before the resumption of uptrend. Part of the consequences of this parabolic growth is we are at a point where the growth is so aggressive that a retest of the previous all-time high would throw the market trend well outside the parabolic envelope. And, as stated above, that would send a very strong macro bearish signal to traders and investors as this marks a breakdown of the 2-year long trend.

Summary:

  1. The parabolic trend bitcoin has seen over the last two years is approaching a very aggressive level that could make bitcoin see aggressive price swings in the coming weeks.

  2. The upper boundary of the parabolic curve could have bitcoin testing the $8,000s.

  3. A break below the lower curve could spark a macro bear market as this signals the breakdown of the bull market’s multi-year trend.

Trading and investing in digital assets like bitcoin and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.

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Ether Price Analysis: Eve and Adam Could Be Turning Back the Bulls

October 17, 2017 Bitcoin Schmitcoin 0

Ether Price Analysis

Since bottoming out around $200, ether has spent several weeks bouncing back and forth inside an ascending channel:

Figure_1 (15).JPGFigure 1: ETH-USD, 4-Hour Candles, Ascending Channel

For the last month and a half, ether’s trend has been contained within the bounds of this ascending channel, where it has continued its bullish rally. However, today (as of the time of this article) it is starting to make moves to aggressively test the lower boundary. Specifically, as ether tests this channel, it is forming a potential reversal pattern called an Eve-and-Adam Double Top.

Figure_2 (12).JPGFigure 2: ETH-USD, 1-Hour Candles, Eve-and-Adam Double Top

At the time of this article, ether is attempting to break the neckline (the pink dashed line) of the massive reversal pattern. Should ether break this neckline, the measured move from this pattern is a $30 move downward, which would ultimately shove ether outside the bullish ascending channel it has been trending within. The price target of the Double Top breakout would bring the ETH-USD price into the upper $200s.

On a macro scale, ether has support along the following Fibonacci levels:

Figure_3 (12).JPGFigure 3: ETH-USD, 4-Hour Candles, Fibonacci Levels

Should the ascending channel break, the above Fibonacci levels will provide support and will need to be tested in order to prove a bearish continuation. As of the time of this article, the Double Top mentioned in Figure 2 is sitting right on the 23 percent retracement values where it is making attempts at breaking it. There is strong support at these values, so if ether can break and hold below $315, it will send a strong bearish signal to the market.

Should the Double Top complete, we can expect a test of the 38 percent retracement values following the break of the ascending channel. At this time, the 4-hour MACD is showing strong bearish momentum on a macro scale, and the market is picking up sell volume.

Summary:

  1. For weeks, ether has been trending within an ascending channel.

  2. Ether is currently in the process of making a strong test of the ascending channel via an Eve-and-Adam Double Top reversal pattern.

  3. If the Double Top breaks downward, we can expect a break of the multi-week bullish channel and a test of the 38 percent Fibonacci Retracement values.

Trading and investing in digital assets like bitcoin, bitcoin cash and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.

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Bitcoin Price Analysis: Bitcoin Rally Shows Strength for Continued Growth

October 12, 2017 Bitcoin Schmitcoin 0

Bitcoin Price Analysis

Today, bitcoin reached a new all time high as it rose by $500 in just a few short hours. At the time of this article, bitcoin is sitting in the $5300s as it looks ready, once again, to spring for a new all time high:

Figure_1 (14).JPGFigure 1: BTC-USD, 4-Hour Candles, GDAX, Macro Trend

On a macro level, BTC is showing signs of upward strength as the RSI and MACD are showing bullish strength. There are no clear signs of bearish divergence yet and the market is starting to pick up in volume as the price climbs, thus indicating that a healthy bullish continuation is likely. Looking at the 50 and 200 EMAs, we can see the slope is pointing upward and the market is trending well above both EMAs, showing us that the market is pushing upward in a sustainable manner.

On a micro level, there are slight signs of bullish exhaustion that may indicate the need to either consolidate sideways or pull back slightly before continuing upward:

Figure_2 (11).JPGFigure 2: BTC-USD, 30-Minute Candles, GDAX, Micro Trend

The MACD and RSI are showing clear signs of bearish divergence on the smaller timescales (shown via the red arrows on the indicators). Also, the current growth is decreasing in volume which usually indicates a lack of buyer interest at the current price levels as the trend continues upward. It’s important to note that the trend can remain healthy on a macro scale, while simultaneously remaining divergent on a smaller timescale. The divergence doesn’t imply a macro reversal — it simply means the current trend is lacking momentum to continue upward in the immediate future and likely needs to cool off before continuing any further.

On the higher timescales, bitcoin appears to be adhering to the ascending channel shown below:

Figure_3 (11).JPGFigure 3: BTC-USD, 1 Day Candles, GDAX, Ascending Channel

Since the beginning of the year, bitcoin has adhered to very nicely to this channel where it routinely tests the top, then tests the bottom, then tests the top, and so on and so forth. If we continue this pattern we can expect to see bitcoin test the $6000s before we see any major correction. However, it is important to note that, compared to Bitcoin’s last bull run to the $5000s, the volume is considerably lower. This may affect bitcoin’s ability to push toward the upper bounds of the channel. On the other hand, the indicators discussed in Figure 1 are showing healthy bullish signals, so we will have to see how the market responds to tests of new highs.

Summary:

  1. Bitcoin found new all time highs in the $5300s after having a sudden $500 rally.

  2. The macro momentum indicators are showing signs of bullish continuation which may push further new all time highs.

  3. The smaller time frames are showing signs of bullish exhaustion so we may see some consolidation before any bullish continuation is seen.

Trading and investing in digital assets like bitcoin, bitcoin cash and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.

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Bitcoin Price Analysis: There May Still Be Some Life in These Exhausted Bulls

October 6, 2017 Bitcoin Schmitcoin 0

Bitcoin Price Analysis

Over the last week, the BTC-USD market has seen some major price swings. At one point, the price nearly reached $4500 only to see it pull back down to the low $4100s. And now, within two days, the price has topped back out in the low $4400s. There has been some major chop and seemingly erratic dumps and price hikes, but overall there seems to be a common upward trent within the macro market movements:

Figure_1 (10).JPGFigure 1: BTC-USD, 4-Hour Candles, Bitfinex, Macro Trend

Since the bottom of the bear run last month, bitcoin has seen several rallies that have continued along a generally positive trend. The figure above shows a trend of higher highs, higher lows and an upper/lower boundary that is converging. This type of price activity is called a rising wedge.

Coupled with this price growth is a trend of decreasing volume throughout the length of the wedge. A rising wedge is generally a bearish trend that shows weakening bullish pressure as each subsequent rally becomes smaller and smaller. As the price corrects, there are rallies that bring the price to new highs, but ultimately rally on smaller and smaller volume.

As of the time of this article, the latest rally has failed to make a new high in the low $4400s. A breakdown of this wedge could lead to a substantial price drop of approximately $500 below the point of breakdown. The approximate price target would be around $3700.

Although rising wedges are bearish in nature, that doesn’t mean new highs aren’t in store for bitcoin. The macro trend is currently showing a potential bearish move, but there is still some strength in the market. The market is currently trending above the 50 EMA and 200 EMA which, by many standards, is representative of a trending bullish market. Although the price is trending upward and the overall EMA signals are showing potential upward continuation, there are pretty clear signs of bullish exhaustion on the macro scale:

Figure_2 (10).JPGFigure 2: BTC-USD, 4-Hour Candles, Bitfinex, Bullish Exhaustion

As stated earlier, the rising wedge is paired with decreasing volume which is a clear giveaway that upward momentum is waning. To complement this exhaustion, the RSI and MACD are showing clear signs of bearish divergence in the current market and are demonstrating a lack of the bullish momentum necessary to sustain a bull market.

If the rising wedge breaks to the bottom, we can expect the support levels to lie on the Fibonacci Retracement values shown above. The ultimate price target of the rising wedge would have BTC-USD testing the 50% retracement values.

On a very, very macro scale, there are clear signs of overall bullish exhaustion since the beginning of its run from the low $1000s:

Figure_3 (10).JPGFigure 3: BTC-USD, 1-Week Candles, Bitfinex, Macro Bullish Exhaustion

Two very clear indicators of bullish momentum loss lie on the RSI and the MACD. The price of bitcoin has pushed to strong, new highs but it has left the momentum indicators weakening. The RSI is showing strong macro divergence, and the MACD is on the verge of flipping bearish for the first time since the ETF was denied back in April.

It’s not hard to argue that bitcoin has seen heavy price growth and needs a little room to breath. It is entirely possible the market won’t see any strong pullback and it may go sideways. However, in the event that a sustained market pulls the price down, we can expect to find support along the midline of the Bollinger Bands in the low $3000s. It’s important that the above chart and market implications of this macro divergence are occurring on candles that are one week. So, while this doesn’t mean the market will just suddenly plummet, it is important to understand that a substantial price drop could be in bitcoin’s future.

Even though I gave plenty of bearish arguments, it should be noted that these predictions are on a macro scale, and the immediate trend is showing strong support along the 50 and 200 EMAs. The market is bullish until proven otherwise. As the saying goes: “the trend is your friend.” Bitcoin has had one heck of a year so far, but I think it’s important to point out the clear signs of a macro bullish exhaustion:

Summary:

  1. Bitcoin is finding support and showing a bullish trend along the 50 and 200 EMAs.

  2. On a macro level, the trend is pushing upward but is showing a potential bearish move if the market breaks out of the rising wedge identified in Figure 1.

  3. A breakout of this wedge would have its price target in the $3700s.

Trading and investing in digital assets like bitcoin, bitcoin cash and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.

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Bitcoin Price Analysis: BTC Makes New Highs as the Market Tests Historical Support

September 28, 2017 Bitcoin Schmitcoin 0

Bitcoin Price Analysis

Throughout the weekend and continuing into the early week, BTC-USD saw a strong rally that brought the price from $3500s to prices in the high $4100s, at the time of writing. Amid global turmoil and Chinese news that initially appeared to be bearish, BTC-USD has seemingly found its bottom and is now working its way onward and upward. Here is a look at the current state of the market and what we can expect in the coming days:

Figure_1 (9).JPGFigure 1: BTC-USD, 6 Hour Candles, GDAX, Macro Fibonacci Retracement Values

At the time of this article, BTC-USD is encountering resistance along the 61% macro retracement values. Resistance at these values is expected to be strong because it had found previously strong support during the beginning stages of the previous bear run. It’s not expected to make a clean break, so a possible, small retracement may pull the market back slightly before continuing upward. Even though we may see a slight pullback, it was very clear that the market is now leaning bullish:

  1. The market is currently finding support on the 6-hour candle’s 200 and 50 EMAs. Typically, when the market is trending below the 200 EMA it is said to be “bearish,” and when the market is trending above the 200 EMA it said to be “bullish.”

  2. The current market trend is pushing the price to new local highs. A trend that brings new highs shows a changing of tides as the bears begin to capitulate and the bulls begin to take over.

  3. On our current rise, the volume is increasing. When the volume increases within the trend, it shows there is strength in the current direction and is likely to continue.

  4. The 6-hour MACD is showing no signs of divergence and every new high is being accompanied with new highs on the MACD histogram. Currently the macro trend is showing strength with bullish momentum.

If we zoom into a small timeframe and look at the 2-hour candle trend, we can see a similar, bullish sentiment beginning to form:
Figure_2 (9).JPGFigure 2: BTC-USD, 2-Hour Candles, GDAX, EMA Cross

Inside the rectangle within Figure 2, we can see that the 200 and 50 EMAs have crossed and are now showing a positive slope with their curves. Historically, the 200 and 50 EMAs for the 2-hour candles have been a great indicator as to the immediate health of the market.

If a bear market makes a strong enough move upward and the 50 EMA crosses the 200 EMA to the top, this market activity is sometimes referred to as a “Golden Cross.” It’s called a Golden Cross because it is a strong market indicator that usually shows the turning of the tides as the bearish traders give way to the bullish traders.

Although there may be some pullback before we climb any higher, we have strong support in the $4100s so it wouldn’t be surprising if we made a test of that support level before climbing onward.

The $4100s also coincides with the 38% retracement. The 38% retracement is a very common retracement value within strong bull runs. Markets rarely make decisive, healthy moves in a singular direction. Often, they take a stair-step type of trend that moves up, retraces, moves up, retraces, ettc. The 38% can be seen as the first stair within our current bull market.

Summary:

  1. BTC-USD managed to make a new high and break the multi-week long descending trendline.

  2. BTC-USD is showing macro trend strength but will likely see a little pullback before continuing higher.

  3. If we do see a pullback, we can expect strong support in the $4100s.

Trading and investing in digital assets like bitcoin, bitcoin cash and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.

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Bitcoin Price Analysis: Amid Continuing China Rumors, BTC Fails to Break Key Resistance

September 19, 2017 Bitcoin Schmitcoin 0

China BTC price.jpg

When it rains, it pours. Last week, news began to hit the crypto community that China was taking harsh measures to reign in their various cryptocurrency exchanges. Several exchanges closed down and others were given a deadline to properly cease trading operations. This news came hard on the heels of recent directives that banned ICOs in China, leading to dramatic drops in cryptocurreny prices across the board.

After this latest news settled, bitcoin managed to slightly rally before topping out around $4100. However, early this week, rumors began to circulate that executives associated with Chinese exchanges are being prohibited from leaving China. At the time of this article, BTC-USD is sitting just at $3900 and is showing signs of further pullback:

Figure_1 (8).JPGFigure 1: BTC-USD, 12-Hour Candles, GDAX, Macro Fibonacci Retracement Values

The figure above shows the whole, macro bull run from the $1700s. One important feature of the trend shown above is the 61% retracement down to the $2900s. The retracement down to such a low value shows that sell pressure is very strong in the current market and hints toward bullish exhaustion within the macro trend. Another key feature to note is the following:

Figure_2 (8).JPGFigure 2: BTC-USD, 2-Hour Candles, GDAX, Failed 100% Retracement

An important test of this rally was the 100% retracement of the bear run, post-China news. Sitting just below the 23% Fibonacci Retracement lies the bear run. The test of the 100% retracement is important because that resistance line marks a strong shift in market sentiment. A failure to break through those values shows that, even though there was a strong rally, the market is still bearish in nature and is likely to continue.

Figure 2 also shows several tests and rejections of the 2-Hour 200 EMA (Exponential Moving Average). The 200 EMA is a common tool used among traders to objectively view the state of the market compared to the prior trends. A trend existing below the 200 EMA is bearish in nature, and trends that show support on top of the 200 EMA are bullish in nature.

At the time of this article, the BTC-USD is displaying two failed tests of key resistance levels and its showing little sign of upward pressure. Currently, the trend is sandwiched between the 200 EMA and the 50 EMA. Both moving averages can used in conjunction to gauge just how strong the market is. Like the 200 EMA, the 50 EMA shows short-term bullish and bearish trends relative to the EMA line: Trends above are showing bullish traits, and trends below are showing bearish traits.

Right now, we are in the middle of a crucial test of both support and resistance lines as the market decides where it will go next. A break below the 50 EMA will ultimate show the long-term bearish intent of the market and will lead to tests of the low support values:

Figure_3 (9).JPGFigure 3: BTC-USD, 1-Hour Candles, GDAX, Support Levels for Current Rally

At the moment, BTC-USD is making its third test of the current rally’s 23% retracement values. A break below this line will have bitcoin testing the macro 38% retracement values in the $3700s. If bitcoin manages to break the 38% retracement values somehow, there will be strong support around the $3400s as the 50% macro Fibonacci Retracement values (shown in Figure 1) have historic significance and support.

If bitcoin is going to see any significant price growth within this rally, it will have to pick up some major buy volume and break through very strong, historic resistance values. It’s extremely unlikely that, given its repeated failures to break resistance and the inherent bearish news looming over the Bitcoin community, BTC-USD will shove to new highs without strongly testing lower macro support.

Summary:

  1. BTC-USD had a strong rally, but ultimately topped out around $4100.

  2. At the moment, BTC-USD is testing macro support levels and shows very little, significant upward strength.

  3. Should we break support in the $3900s, we can expect a test of the macro 38% Fibonacci Retracement values in the $3700s.

Trading and investing in digital assets like bitcoin, bitcoin cash and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.

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Bitcoin Price Analysis: How Rumblings From China Play Into Wyckoff Distributions

September 15, 2017 Bitcoin Schmitcoin 0

China BTC price.jpg

Unless you’ve been in a crypto-free cave for the past week, you might have noticed the crypto-wide market drop.

Last week, rumors of China’s crackdown on BTC to fiat transactions began to spread across the crypto-world. On Monday, mainstream news sources such as The Guardian, Forbes, Wall Street Journal, and Bloomberg further supported or confirmed these rumors by releasing articles with the news of a Chinese crackdown on exchanges.

According to Chinese state newspaper Securities Times, “All trading exchanges must by midnight of 15 September publish a notice to make clear when they will stop all cryptocurrency trading and announce a stop to new user registrations.” 

Within a day and a half, BTC-USD saw a 15% markdown as the price dropped from $4400 to $3750. After all was said and done, BTC-USD managed to squeeze out one last push before bottoming out around $3000. The bottom was immediately greeted by a strong rally that propelled the price upward by $900.

The price shot down, the price shot up — where does this leave us now?

Figure_1 (7).JPGFigure 1: BTC-USD, 6-Hour Candles, GDAX, Macro Bull Run

Since the beginning of this bull run from $1800, we have established very clear, very strong support and resistance levels along the Fibonacci Retracement set shown above. At the time of this article, BTC-USD is testing the macro 38% retracement line where strong, historic support will prove quite tough to penetrate. With such a large growth in such a short period of time, BTC-USD managed to climb about 150% in market value within the span of about a month.

One idea I’ve been considering during the climbs to toward the ATH is the the Wyckoff trading range schematic shown below:

Figure_2 (7).JPGFigure 2: Wyckoff Trading Range (A great breakdown of schematic details are found here)

Historically, as markets progress through time, they go through phases of accumulation (a phase where investors and traders begin to buy and accumulate assets) and distribution (a phase where traders and investors begin to sell off their accumulated assets). In order words, the market goes up and a bull rally begins, the market begins to top out, and then a bearish rally will bring the prices back down to a comfortable level. It’s a sort of give-and-take in the market as traders begin to place their bets on the future market direction.

In our current case, over the last couple months bitcoin has formed a very similar pattern to Distribution Schematic #1 shown above. The above schematic represents one of the possible ways a market can rise, find its top, and distribute assets to market.

Comparing the schematic above to the the current BTC-USD market pattern, we can see a lot of striking similarities:
Figure_3_again.JPGFigure 3: Wyckoff Schematic Within BTC-USD Trend

The nomenclature for this schematic is found here and is vital to understanding the upcoming discussion.

While a bearish continuation has yet to be confirmed, the most recent price hike this morning seems to fit the last test of the Wyckoff schematic LPSY (Last Point of Supply). The last point of supply is essentially a false rally where those who didn’t have an opportunity to sell on the previous LPSY now have an opportunity and will begin to sell into the more bullish traders who fall victim to a false breakout.

The SOW (sign of weakness) is marked by high sell volume that leads into an AR (automatic rally) where the sell pressure lets up and bullish traders assume a bottom has been hit. The automatic rally is marked by a bullish climb with great ease before finding its top near the previous lines of support shown above in green.

The LPSY is most notably described as a series of peaks and valleys on a fairly narrow spread as the bulls and bears exchange positions. During this LPSY, we will expect to see diminishing volume as the market pushes to new highs and becomes more and more difficult.

A closer view of the current trend reveals we have begun the process of weakening rallies with the LPSY:

Figure_4 (3).JPGFigure 4: BTC-USD, 5-Minute Candles, Bitfinex

Throughout the length of this small trend, we can see diminishing volume on each consecutive push toward new highs. If we manage to continue downward, expect turbulence at the $3000 levels and a possible secondary bounce as the $3000 level offers very strong, historic support.

It should be noted however, even though this current trend has a strong resemblance to the Wyckoff schematic, it is always important to confirm the trend before trading it. As with any market, it is entirely possible that this Wyckoff distribution pattern will fail and bitcoin will manage to continue onward and upward to new highs. A market reversal should definitely not be ruled out as the current market trend is showing a strong sign of uncertainty between the bulls and bears.

Whether the market breaks upward or downward, always confirm the move with strong volume to support a strong move in the direction the trend. Volatility is to be expected, but we approach the market with a level head and objectivity, seeing the proper positional entries and exits will much easier to spot.

Summary:

  1. Strong, bearish news hit the crypto community this week as China announced harsh regulations on the BTC to fiat transactions on exchanges.

  2. Currently BTC is seeing a strong rally off the $3000 levels but is showing signs of waning strength in the upward direction.

  3. A possible macro distribution pattern is unfolding and new lows could be in store for  bitcoin over the next few days and weeks.

Trading and investing in digital assets like bitcoin, bitcoin cash and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.

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