Welcome friends, to this update analysis on Bitcoin! Let's get right to it! Looking at the four hour chart, you can see that BTC is creating a bear flag, inside of a larger bear flag. Additionally, it's forming this smaller bear flag, just above the falling pink trendline, which formerly represented the top of BTC's downtrend channel, until the channel was shifted by the high formed on 3/5. You can see that on the 12th, BTC rallied up to the rising green trendline (which has also been a very important and reactionary level in my analyses) and it was rejected at the green trendline exactly. That was actually an upside breakout of the bear flag, which quickly failed, as price printed a bearish engulfing candle, which now represents the flag pole of the small bear flag. Furthermore, inside of the smaller bear flag, you can see that there have been a series of failed attempts to close a candle above the 20 EMA (in blue.) You can see that several of the most recent candles have tall upper wicks, which indicates distribution (selling) particularly above the 20 EMA. So, the sellers are clearly stepping in, and unloading BTC when the price rises above the 20 EMA. It appears as though the current candle could also fail to close above the 20, printing a bearish hammer in the process.
On the MACD, we can see that it has flattened out, as the momentum has died during this bearish consolidation. Volume is also decreasing, which is typical to see during flag consolidations, so the indicators are essentially confirming the flag action on the chart. That doesn't necessarily mean that a downside break is certain. Currently, there appears to be a high probability of a downside break, but I'm not here to "predict" whether or not it's going to break to the downside. That's not what analysis is all about. We identify patterns, and trade the breakout. Whether it breaks to the upside or the downside doesn't matter. I'm going to make money either way, and here's why. I can see that inside of the bear flag, there also appears to be a weird inverse head and shoulders formation that is taking shape. So, perhaps these fags break to the upside, and they fulfill the inverse head and shoulders pattern instead. Do you see what I mean? That's why we always WAIT FOR THE BREAKOUT! Personally, I would rather see a breakout to the downside, because I think it will be more violent, and I will be able to make more money at a faster rate.
Here's how Magic plans to trade this flag. The moment it breaks to the downside, I will short it, with a stop loss just above the bottom of the flag, with the intention of seeing BTC retest the 6000 level. I will unload 1/4 of the position, at each 1/4 interval on the way to 6K. If a reversal signal emerges anywhere in the middle of that trade, I would unload the entire short. On the upside, I will wait for a breakout above the black trendline, which represents the top of the downtrend channel. Sure, I could go long at a break above the green trendline, but the upside is minimal with that trade. A break above the black trendline would be much more substantial. From there, I would expect a retest of the blue trendline, which represents the neckline of the inverse head and shoulders pattern. That's my entry point, for a long side trade. I'm the master of the charts, the professor, the legend, the king, and I go by the name of Magic. Au revoir.
This has been your not-so-humble market wizard, droppin' knowledge like bombs in this place! Please follow, comment, like, and share on social media. Good luck trading everyone!
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-Magic loves you-
-JD-
Yorum
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I should have included this trendline in the analysis. you can see that there is an important level that will come into play, if BTC falls into double bottom territory. It is a rising trendline support, created by the lows of 7/16/17 and 9/15/17.
This guy gets it right again, but people still keep talking shit LOL.
whodat692
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@LuTaKoS, He didn't "get it right." He said it was going to break out above 12,000 in an inv head and shoulder.
The_Real_AMF
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@whodat692, and then it didnt. so you adapt and incorporate the new data and make another prediction. what is so hard about this concept for people?
ChartmanChris
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thanks, master magic poop. (try Grammarly app for safari for the typos I am using it and it's awesome)
is it ok to ask a few questions on how to execute something like this? I think a lot of eager newbs or less experienced people like me would really appreciate this.
let's say some of us are all in cash (which I doubt because we are holding some bags ) ready to trade either way. let's say we are too inexperienced to short.so we are concentrating purely on that bounce of the bottom (trust me that's already hard enough for most here )
1.a: how strong of a confirmation for a trend reversal is a double bottom really?
b: is it´s upside target almost similar to the inverse H&S target which didn't come about or am i wrong?
2. do you see it really hitting 6000 ?
3. From where do you ladder in your limit orders (from where to where for this double bottom bounce trade)? and
4. how do you make sure it doesn´t fill all your buy orders and fall past them towards an even lower downside. on most exchanges, you cant place a buy and a stop at the same time for the same position. (see question below)
5. if you are convinced of a bounce back from 6000 what would you do, if for some reason (you're still a young inexperienced magic ;) internet failure, an accident,you´re a newb ) you were now holding bags from let's say 9750? as its still possible the downside target won't be met would you consider holding instead of selling at a loss - rather than trying to hit a downside target which you might miss? ejecting now at 8700 means you need to make up 1250 on every 1000 you lost on way down!
there are other factors which may mess up your trade ( like orders not filling or slippage) so I have even 2 more questions.
6. at which exchange can you set limit buys and stops simultaneously? if nowhere how do you do it in a 24hour market? let's say you also have a job!
7. a. and how close below your buy-in at 6000 would you set the stop loss?
b:and do you set a market order stop (risking slippage)?
c: or risk parts of order not being filled with a limit stop loss? -- how large should the gap between stop and limit be to avoid this risk?
thank you ( sorry there are so many questions here but the theory is great and all but executing it correctly is a totally different animal .
would you consider creating a group with a monthly fee where we could be more interactive and practical?
some of us are getting shredded here and I am sure you understand that this feels like fighting a Viking in a swordfight with a comb.
thanks
veltto_keksi
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@mr-cryptopia, "this feels like fighting a Viking in a swordfight with a comb." Not a bad way to express trying to trade a bear market. Which is why I don't. Just waiting for BTC to hit around 6500 to go long.
ChartmanChris
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@veltto_keksi, haha yeah i am proud of that analogy ;) are u a 100 percent sure it will hit 6500 and really bounce though?
llywellyn
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@mr-cryptopia, short is like long but opposite
TianamenSquare
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@llywellyn, long is you're in and riding it on the way up. short is the opposite -you're out and waiting as it drops - PLUS you sold someone elses stuff [at a high point] which you will rebuy & repay when you are done being short [hopefully at a lower point].
PhilWil92
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You...umm...missed a "l" in one of the times you tried to spell flag lol