Retail traders begin capitulating. Is it the end or beginning?
Good morning, traders. It was a rough Monday for some of you, I'm sure. Those who have been following my live streams knew yesterday was a distinct possibility and, hopefully, were prepared for it. I continue to preach the importance of risk management so that traders don't get caught when price swings opposite their anticipated direction. The question now is has price fallen enough or is there further to go? I know the most bearish among you are guaranteeing and confirming that $3K is the next stop, but that is just silly. Why? Because price doesn't HAVE to do anything, most especially what the "herd" of retail traders thinks it MUST do.
Here's what we know: Any time shorts cross the 1:1 ratio with longs, they get squeezed. Currently, they are sitting at 1.2527 which is the highest they have been against longs since November 2017. Even the April squeeze saw the ratio only rising to 1.1990. Overnight, shorts have continued to grow parabolically, now sitting at 33251. The ATH for shorts was right before the April squeeze when they reached 40719. In, both, the short and shorts v. longs charts, we can see that RSI is dropping as the number/ratio is increasing which indicates bearish divergence. The longer it goes on the stronger the squeeze that will result. Bitmex 24H volatility has finally broken free of the descending wedge that it has been printing since February 2018. As I have mentioned many times before, this should indicate the return to a bull market. Of course, as I have pointed out during the live streams, we also saw price and volume rising together in the July leg up which indicates an incoming bull market as well. So, back to the original question: has price fallen enough at this point or will it drop further? Nobody knows for sure and if they are guaranteeing you one thing or the other then just know they are either lying to you or themselves.
As I am writing this, I am watching large over-leveraged, under-capitalized shorts getting liquidated thereby propelling price upward almost $200 just as I warned last night would be the case. This will continue to play out as price rises because of emotional retail traders who employ the greatest leverage possible and pray that price goes their way. They are absolutely sure that price must drop further. These "casino" traders will continue to fill the bags of the real traders as they are liquidated. Ultimately, the $6800 box remains the key area of resistance that must be breached. At this time, we can see a possible inverse head and shoulders being printed. Remember, it isn't confirmed until we see volume expanding as the right shoulder is completed and price breaches the neckline. If this does not happen, then we will likely see price fall at that time. Other notable bullish views are that we are still following the Wyckoff outline with this being the LPS and, unless price breaches the June low, this leg down could be a wave 2 according to Elliott Wave Theory. The 4H and higher TFs clearly show a strong descending broadening wedge forming (one of many within many during this downtrend) within a descending channel and we can see volume increasing with price on the smaller TFs. We can also see price being supported by the December log line and accumulation continuing to increase. Until price breaches that aforementioned $6800 box, we should be wary of another leg down or at least a return toward the recent low and/or June low. We are watching the $5450 and $5250 areas in that case. The 1H chart provided denotes the other support and resistance levels that we are watching with the nearby yellow 4H block being the strongest resistance for now. A push through that box sets up a move toward $6800, depending on the strength of the breach. Traders should continue to watch price action and volume. If price continues to increase and volume increases with it, then that indicates demand and we should expect further movement up until volume drops off.
Here's what we know: Any time shorts cross the 1:1 ratio with longs, they get squeezed. Currently, they are sitting at 1.2527 which is the highest they have been against longs since November 2017. Even the April squeeze saw the ratio only rising to 1.1990. Overnight, shorts have continued to grow parabolically, now sitting at 33251. The ATH for shorts was right before the April squeeze when they reached 40719. In, both, the short and shorts v. longs charts, we can see that RSI is dropping as the number/ratio is increasing which indicates bearish divergence. The longer it goes on the stronger the squeeze that will result. Bitmex 24H volatility has finally broken free of the descending wedge that it has been printing since February 2018. As I have mentioned many times before, this should indicate the return to a bull market. Of course, as I have pointed out during the live streams, we also saw price and volume rising together in the July leg up which indicates an incoming bull market as well. So, back to the original question: has price fallen enough at this point or will it drop further? Nobody knows for sure and if they are guaranteeing you one thing or the other then just know they are either lying to you or themselves.
As I am writing this, I am watching large over-leveraged, under-capitalized shorts getting liquidated thereby propelling price upward almost $200 just as I warned last night would be the case. This will continue to play out as price rises because of emotional retail traders who employ the greatest leverage possible and pray that price goes their way. They are absolutely sure that price must drop further. These "casino" traders will continue to fill the bags of the real traders as they are liquidated. Ultimately, the $6800 box remains the key area of resistance that must be breached. At this time, we can see a possible inverse head and shoulders being printed. Remember, it isn't confirmed until we see volume expanding as the right shoulder is completed and price breaches the neckline. If this does not happen, then we will likely see price fall at that time. Other notable bullish views are that we are still following the Wyckoff outline with this being the LPS and, unless price breaches the June low, this leg down could be a wave 2 according to Elliott Wave Theory. The 4H and higher TFs clearly show a strong descending broadening wedge forming (one of many within many during this downtrend) within a descending channel and we can see volume increasing with price on the smaller TFs. We can also see price being supported by the December log line and accumulation continuing to increase. Until price breaches that aforementioned $6800 box, we should be wary of another leg down or at least a return toward the recent low and/or June low. We are watching the $5450 and $5250 areas in that case. The 1H chart provided denotes the other support and resistance levels that we are watching with the nearby yellow 4H block being the strongest resistance for now. A push through that box sets up a move toward $6800, depending on the strength of the breach. Traders should continue to watch price action and volume. If price continues to increase and volume increases with it, then that indicates demand and we should expect further movement up until volume drops off.
