Bitcoin Likely to Make New Lows

8 Agu 2018

One thing we learn is that bitcoin doesn’t give you a second chance. This has been difficult to trade the last 2 months because it hasn’t retracted once it makes its move so you either have to time it perfectly or buy breakdowns.

I didn’t see characteristics of a bottom when we turned and didn't fit into my cycle count. I also never saw confirmation to go long, though I thought it was possible we could turn. That's why I always want a weekly swing before I reposition long term holdings.

In these situations where I'm not in a swing trade, I make a few short term trades until I see something that is tradeable. At the top i carried a small short at $8200 but I covered at $7500. I took a few shots at going long in that area in case bitcoin was ready to turn, but was stopped out. I waited to see if bitcoin would pick up buyers in that area or $6900. I was planning to take a large short at $7300 as I could put a close stop to manage risk, but we never got there. And that is just part of risk management.

For me, the drop of $6800 was confirmation that we will head to new lows so I took a swing trade position on the break down because this was a very important area. And my opinion is that we would need a close over the downtrend line or above $7000 for me to get out. That gives me a price area close enough for a stop to manage risk. I’d like to add to it on a pullback and I’m hoping we get back to test the downtrend or breakdown area, but as I said, bitcoin hasn’t been giving us a retrace.

The daily is on a TD9 today and we are just about the .786 retrace so a bounce here would make sense, but I will not go long. Psychologically, people are devastated. This is the 3rd monster rally that retail got dumped on. If buyers weren’t prepared to load up at $7500 or $6800 then why would they buy up at $6300? So I think longs here are dangerous despite being severely oversold.

Price action now is starting to line up with my original prediction from March.



When everyone else was preparing for a resumption of the bull market, I was looking for bitcoin to form a major low late summer with the ideal time being September. I felt that it was possible that June could have been the low but I never thought that was likely despite a convincing rally. Today I believe we are in a position to get the 2018 low in the next 2-8 weeks.

12 Agu 2018

Catatan

I always find it interesting that when we are in a bullish trend, all you hear is the trend is your friend. When we go down aggressively its always oversold and a crowded trade.

All the longs think everyone is short and even a lot of bearish people are looking for a bounce to $6800 to form a right shoulder.

There is no doubt we've had a quick aggressive move down and a bounce to ease oversold levels wouldn't be surprising, but we are still in a bearish channel and bitcoin has this tendency not to retrace. Bitcoin really needs to get past $6400 and break that channel. Then I could see a bounce and $6800 would be a great short for risk/reward.

All I can say I constantly look for bitcoin to retrace to ideal areas and it never seems to happen.

14 Agu 2018

Catatan

We never got the bear flag I was looking for and the daily cycle is now on day 51. I always talk about how I hate markets that go straight up without a pullback. Well, I hate markets that go straight down without retracing.

Shorts way over 30,000 again, so this market is set up for a short squeeze. And though its always dangerous to touch the same area for the 4th time, since we've never reset the RSI, its not uncommon to just run out of sellers down here at support.

At the same time, if we break support, its also set up for a capitulation candle. I think there are stops at $5700 and smart money might try to run them. I have a short but I've covered part of it and will cover the rest if we close over $6000. $5200 to $5400 has a lot of fib confluence and I think that would make a great long but here lately bitcoin doesn't give a perfect entry.

15 Agu 2018

Catatan

I'm bearish overall and expect us to eventually make new lows but we went down too far to fast and despite a nice rise off the bottoms, the shorts are piling on. This is likely to cause a squeeze at some point.

16 Agu 2018

Catatan

I'm in a long here, but I have a stop at $6150. If we start trading below yesterdays candle then thats a bad sign. Everyone got bullish on that last run and it may have just been a fakeout before one more flush down. But shorts are still huge and eventually those shorts will get burnt.

If we go down from here, this market will be set up perfectly for a capitulation low. I love the confluence here. I'll make a new post if this happens, but I think we could get a big nasty red candle then a gigantic green reversal day. I'd really like to see that. If we make a new low I'll be buying aggressively

19 Agu 2018

Catatan

Still in a range. Still generally undecided. My bias is short so I'm taking short positions at resistance but I will close if we have an hourly close over $6500.

If that happens then I'm looking for two scenarios. We work our way up to $6600 and then have a nice high volume breakout which I'll buy and expect a move to $7300.

The second scenario is that we just trade sideways at $6500 - $6600 and all breakouts get sold into. Then bears will eat up the bullish buying and it will lead to a drop similar to what happened at $7600. Time is a big factor. Bulls really needs a clean high volume clean break. I will ladder into buyers if we break up. Too much time at $6600 and it starts to run out of buyers to push higher, then you have no one to buy support and it falls.

20 Agu 2018

Catatan

Trading at the top of the range for awhile. So it gets dangerous the longer we go without breaking through. For a bullish breakout, it needs an hourly close above $6700 and then you want to see some continued flagpole - flag trending. If it just hangs out at the top of the range, it eventually runs out of buyers and will collapse.

I closed my short on yesterdays rally and stayed flat until we had that selling candle at $6480 this morning. So I'm short again but trading a range is difficult so I'm using small positions. At this point, if we get back to $6500 again, I'll get out and wait again.

My trading plan is simple. I believe we are going to make new lows. I want to be short whether thats at $6500, $6800, $7300. I'll close trades as we break resistance and at times, I'll scalp longs on breakouts. But for the most part, I'm looking to ride a trend down. At $7500 I'd reconsider my trading plan.

21 Agu 2018

Catatan

More choppy chop. Bitcoin went down to $6200 and is now back up over $6400. Everyone is talking about this huge short position and expecting a big short squeeze.

That bothers me a bit. I mean, EVERYONE is talking about it and the rally this morning is really getting people bullish. I've never seen two short squeezes this close together. So I think its a bit naive to go long just based on that information.

Up until the last few days I thought $6800 - $7300 were fairly likely, but all this talk of bear traps and short squeezes has me wondering if we get there.

I was short from $6500 but got stopped out of part of my position. I'll see how this unfolds before I add to shorts or cover.