Updated

Finally a Breakout from the Descending Wedge, now Reversal?

Bitcoin has been moving within a large descending wedge since March 28 with a "bottoming" from April 1 through April 6 of roughly $6500. While 1 D RSI convergence hasn't been signaled strongly enough to suggest that this is really the "bottom," and Google Search Trends have shown continued sentiment weakness, the breakout from the descending wedge was extremely strong with volume moving nearly 3X while price moved around $1200 in 30 minutes. Clearly, the market has been waiting for "the other shoe to drop," and that hasn't happened, so given low liquidity conditions with ridiculously low volume this morning prior to the breakout, the conditions were ideal for a large price move given the price action moving out of the descending wedge. Unlike previous moves that felt like pump and dumps I didn't get the feeling that the order books were seeing serious spoofing or unusual order volume. I wasn't really focused prior to this move but right as the price was breaking 7k I started looking to see if there was some news driven sentiment shift. Unfortunately, I've been conditioned to avoid these big momentum moves now since I got burned a few times so I didn't really figure out what was going on. Also, it was extremely early in the morning and I was basically ready to fall asleep. Given the size of this pattern my feeling is that there could be more to this rally if volume continues to increase. So far, the 1 D has closed above a descending trendline going back to March 7th. A number of trendlines appear to push price action into a decent bull flag/pennant type pattern over the next few days. This would signal the possibility of another push, perhaps to $8500, by late April 18, early April 19th, so about a week, which would be a touch off the major descending trendline from the top of the market in December. A major push above this trendline could trigger significant momentum and volume.

This breakout above the upper trendline of the wedge, aka the descending trendline from March 5 (the start of this bear move), happened to cross paths with a descending trendline from March 29th, which may have added to the strength of this move. Also, with price having been in parallel ascending channels since April 4th, the breakout also crossed from the lower channel line of the smaller channel to the upper channel line of the larger channel before moving quickly back below a descending trendline from March 7th. For now, this upper channel trendline appears to have strong resistance, which should lead to some kind of pennant/flag forming over the next few days to consolidate the market into another move.

Now, at just below $7880, RSI divergence has been signaled up to 45 min with another wave higher possible to signal 1 hr divergence though it seems more likely we'll see a short term move back down as a pennant forms. This could be an ideal scenario for 5 min RSI trades.

Overall, the market still feels bearish so it will pay to be cautious here. WSJ just published a very negative though slightly clueless sentiment piece saying that Bitcoin has hit a "boring" phase, which suggests sentiment is low, but also suggests that we may be near the bottom. While the "bottom" might lead to another 50% dip or a sustained period of relatively lower volume and price action, this could be a positive for trading smaller positions and looking for altcoin volatility when BTC moves more or less sideways.

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What I've said previously, since about March 28, was that 1 D ADX was signaling a bottom, which has been confirmed with the dip and move back to March 28th price levels. Now DI+ looks to move higher should this trend continue though with 1 D ADX we could be talking weeks for the trend to form so we're not dealing with a tradeable signal here.

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Given the bearish sentiment in the market it will be critical to use stops to protect profits if longer duration RSI divergence signals possible short opportunities.

Currently RSI divergence is being signaled at up to 45 min timeframe which suggests we could see a run higher before a more sustained reversal.

Need a break as I'm getting sleepy.

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Even missing the big momentum breakout, which was the most obvious trade, trading the dip from just above 8k to around $7600 would have been a 5% gain, and then trading the bounce from about $7600 to $7900 would have been about 4% as well.

So in total if you had traded a $1000 move, i.e. about 14%, the 5% move, and a 4% move, you could have in theory gained 23% on three fairly short duration swing trades. Though on each of those trades the signaling was mostly momentum and trendline support/resistance levels with maybe 3 min RSI signals, which can be tricky and tough to interpret on the fly especially given rapidly changing liquidity conditions.

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A huge sell wall at $7820 showed up and then disappeared.

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I thought we might see more time before another breakout but it seems like a 4 hr close above this descending trendline after a bull flag may have triggered it.

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RSI divergence is now starting to signal at 1 hr and 2 hr timeframes so we should see a slowing in this rally but $8500 still appears feasible to be the near term target.

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Volume seems to have stalled so should price continue to creep higher on declining volume we'll have a fairly clear signal to ladder into a short somewhere around $8500 assuming MACD/RSI divergence continues to signal and we see the price action unfold over the next 5-6 days.

A break above $8350-$8500 on rising volume in the next day or two would invalidate the short strategy and open up the possibility of testing the major descending trendline off of the December ATH.

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A break below the bullish channel line on the 2 hr has started, while volume has declined despite higher highs, which strongly suggests this rally is running out of steam or at least moving sideways for a bit.

3/5 min RSI convergence seems to have driven the nearly 2% move from about $7820 to $7970.

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With volume dropping back to pre-breakout levels it seems like we could be getting some volatility soon. 1-2 hr RSI divergence would need another move higher, which is suggested by the current pennant though if we move sideways out of it this pattern will be invalidated.

The top of the "big channel" has served as strong resistance and should the price move above this pennant it could bump against this trendline to confirm 1-2 hr RSI divergence and possibly an ascending wedge, which would both strongly suggest a reversal.

If we see this movement in the next day or so (Sunday) we can watch for a breakdown at the upper trendline of the "big channel" in the $8270-$8350 area. A break above here to $8350-$8400+ could be possible but RSI divergence would likely start growing stronger unless we see some big positive momentum and volume changes.

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Where this ascending channel line intersects the current descending pennant line in the next few hours could be where we see price action.

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Looking at the 1 D chart we can see that ADX is very near a trend shift from positive to negative but significant continued gains or at least steady gains over a longer duration would be needed to see that reversal while RSI suggests we could be in for a near term reversal with 4 hr signaling overbought and divergence signaling a low momentum/volume move higher here could fail and/or reverse.

1 D RSI also suggests that we're hitting a critical threshold that hasn't been broken during this bear run. Should 1 D RSI break 60 then we could be confirming a "bottom". 1 D RSI divergence never confirmed the top as overbought so this suggests that the bottom is much closer to being confirmed than the top.

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Should we see a move into the $8500-$9200 level there should be heavy selling/shorting, which if sufficient momentum can break this price level would result in a huge short squeeze. That being said, a short at the $8500-$9200 level would have strong risk:reward given the overall pattern looking a lot like a descending triangle. A failure to close above $8500 prior to April 19 should see very heavy selling into the bottom of the triangle/trading range at about $6500, which would be a $2000: $200, 10:1 reward:risk on a short at $8500.

Should price fail to hit $8300+ then we wouldn't be confirming the longer duration RSI divergence and would need to wait for a stronger signal.

With 50 D MA moving in very near the near duration price target this could also add to the resistance at the $8300-$8500 range.

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The fact that price has managed to creep up slightly while volume continues to fall strongly suggests that this market is still inherently weak and any run here should face continued challenges. Until we see a really strong 1 D RSI convergence I don't believe that we've hit the "bottom" so any buying into rallies here should come wtih the expectation that we could see continued moves lower until all of the right market signals come together.

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As I expected, we're starting to get some volatility/price action/volume as we approach this intersection.

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Given the very small size of this potential ascending wedge it seems unwise to go short on a breakout of this current pennant unless we come close to $8500 as expected. A reversal from $8300 would likely be weak off this pattern given the size and another move higher could play out over the next 3-4 days given the strong pull of the major descending trendline that we're approaching.

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Given the mostly sideways nature of this market 3-5 min RSI swing trades could have been very profitable over the last few days off the end of the last breakout. With liquidity now at such dramatically low levels these short duration trades start to look very risky as very sudden bumps in volume could trigger the market to move one way or the other.

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Even missing the fairly obvious short off the top around $8000 there would have been two opportunities to buy in on the dip in the $8600+ range.

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You can see on the 1 min chart the volatility that sprang out of nowhere. Between GDAX and Bitfinex there was at least a $20 spread off that dip.

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Clearly, at $8100 there was some selling/short pressure resulting in a sudden move but overall, given the chart expectations this likely would have been a "dip" buying opportunity for those trading very short duration here like HFT bots or whales looking for a break higher. Should a significant number of shorts get squeezed here this would be the typical false breakdown narrative where the price moves in the opposite direction of expectations on a volume burst, setting up a potential stop hunting scenario off the reversal.

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Since the market has failed to push the price higher at the intersecting trendlines we're now moving towards another convergence of a shorter duration trend and a break above $8130 could trigger a small breakout higher.

Order books suggest this possibility though we could be seeing a mini pump and dump as well though I haven't seen any large sells. Volume has continued to fall off dramatically so this suggests this rally could be ending soon.

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Some big sell volume now on low liquidity though nothing too crazy probably mostly stops getting hit.

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I should've said big volatility on relatively higher sell volume... not really big volume.

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In general, the risk:reward to go long here looks bad being maybe $500:$200 (1 BTC) based on the charts for a short duration trade on declining volume so we may see a breakdown or just a continued move through the end of this pennant/triangle on even lower volume. Given such low volume one would expect some major market mover to enter to try and nudge things one way or the other.

A break below the major support just below 8k would likely trigger major selling.

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Some big order volume sitting right at the bid just below market price but not a ton of volume/buying ... There's hardly any volume because this 114 BTC volume at $8087 is staring at a 168 BTC sell wall at $8097.

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It seems more likely that this sell volume at $8098 will pull off higher if this tiny volume/momentum continues and we'll just see the market continue to be stuck right around $8100...

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Pretty weird it worked out. Guess I shouldn't doubt myself...

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This big resistance at $8400 seemed to lift off and big momentum opened back up but that could be a false move.

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And just as quickly as we saw that momentum and order volume it's reversed and I'm seeing big market sells.

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The next big resistance in the order books is 8.5k, which would coincide nicely with the projected intersection of ascending lines with the major descending trendline.

A break above this line should trigger big momentum/volume though I think this would be an ideal target for a short as a failure here will give you an optimal entry while a break above should trigger a significant enough gain that you can stop out and reverse the position.

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5 min RSI is sky high so the expectation here is that some divergence will again signal and we'll see some consolidation. Overall, 2 hr RSI divergence suggests that hitting 8.5k will likely trigger a big reversal so the short still seems like a safe bet.

I wouldn't jump into it too early, which, it seems could have been the case in this last breakout, as shorts got squeezed with low liquidity.

Getting back into this ascending channel is positive and closing above this big upper channel line should push the price into a natural area of consolidation that approaches the major descending trendline.

This could lead to some near term volatility. I would wait a few days to see if this price action consolidates as expected.

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For some reason I pasted the wrong chart.

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2/3/4 hr candle should close above this upper channel line. This might trigger some volatility and again might be a good trading zone for 1-5 min RSI trades since the trading range appears to be about $200 or about 2.4%.

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Having failed to hit the 8.5k target and now out of the ascending channel, 5 min RSI convergence signal with a sharp bounce off 8k prior to that suggests we'll get a bit of a rebound and possibly a move back to test this trendline around $8200. Given a lack of trendlines the market could behave somewhat erratically here though volume has bounced quite a bit higher with the volatility in the last day or so.

All signs point to a bigger reversal here so it would have been wise to ladder into a short prior to yesterday's move above $8400 perhaps near the green trendline that is serving as strong resistance.

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While a small H&S pattern here appears possible the best possible entry was probably $8400 and there would have been no touch off the major descending trendline so I'm not convinced the market will just turn around without testing that trendline since a stronger RSI divergence signal could be signaled if the price hits $8500 and the (green) ascending trendline creating strong resistance will pass higher in the next couple of days possibly reducing the resistance through that same area.

This could play out over a relatively longer timeframe.

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Volume falling again though we're basically moving sideways. Given the strong support/resistance around 8k we'll probably see some slightly downward price action within this new descending channel that appears to have formed. We'll see how things unfold over the next 12-24 hours to get a better sense of the market. I don't see any major triggers to push the market above 8.5k in the near term so it could be we'll get some more volatility after a push lower perhaps to 7.8k.

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This intersection between the ascending channel and the major descending trend line is over a week out so we may see some opportunities buying off $7.75-7.8k and shorting from ~$8200 which may be possible if we get a slightly longer duration RSI convergence off of $7900-$8000 in the next 7 hours.

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Looking at the 1 D chart there seems to be a narrow trading range that is clearly visible from the beginning of the decline off the ATH with trading moving into the upper quartile of the channel, roughly $6700-$8400 with the termination roughly May 20. These lines nicely intersect with a time period that I previously mapped out using historical 2014 data to predict when we might see price move above the descending trendline in this bear market.

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Looking back now I think maybe I drew the 2014 descending trendline as a more short term trendline that doesn't compare as similarly as I thought to the current 2018 trendline.

Redrawing that line puts the comparable crossing of the descending trendline at the equivalent of about $4200 though the 2014 trend was far less steep than the current trendline.

The rally through 2013 was also relatively smaller in multiples (maybe 6X) than the rally through 2017 (~25X) which would explain why the corresponding decline has been significantly steeper.

My feeling is that institutional money wants to see some improvements in regulatory frameworks and ensure that the markets are regulated properly before making any big moves. This would coincide with expectations of lower prices as well given the overall weakness in the market.

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Overall, the price action has been kind of boring. A bigger RSI convergence never really materialized and the price seemed to not have much momentum going below the major support around 8k and given the extremely low volume we'll probably see a few more low liquidity moves like the pop up above 8.1k.

I added a few things to my chart but overall price action seems to be staying within the expected trend.

With that being said Litecoin appears to be taking off for some reason.

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I don't really see any explanation for Litecoin's bigger move here though overall Bitcoin price stability has probably encouraged speculation in altcoins.

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A head and shoulders here would suggest that we're at the "top" now of this move but since this pattern is relatively weak overall shorts could get hurt here due to low liquidity. Unless we get a bigger trigger I still think the current projections for relatively sideways price action make the most sense.

A head and shoulders trade here prior to confirmation would be a reward of about $475 (on 1 BTC) with risk of say $100 if you set a stop of $8250, so pretty reasonable I suppose.

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There's a big sell wall now trying to force some selling.

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Litecoin has HUGE sell volume at $140 yet the price is pushing ever closer to it.

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Someone market sold 860 LTC.

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Trading in LTC has been much livelier than in BTC. If my expectations for relatively sideways price action over the next week are accurate then we could see some even bigger price action in LTC and other alts.

In relative terms Litecoin is doing a lot more volume than Bitcoin than normal right now which could explain this price action. LTC usually trades at a relative discount but right now just based on relative volume it's trading at an even bigger discount than usual.

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Despite EVEN MORE sell volume stacking up at $140 LTC price is still creeping back towards $140.

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Big buy wall now trying to pump BTC.

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It seems counterintuitive that you would have BTC trying to pump while LTC has so much volume lined up to sell.

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That BTC pump managed to drive the price up maybe 0.5% while in LTC there was a dip to $138 and then a 0.87% bounce to $139.20 in less than a minute.

It definitely seems like when BTC goes low volatility altcoins become more attractive to trade.

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If ADX continues to weaken below 25 then this strongly suggests another relatively large positive move can happen here. And given the proximity to the major descending trendline this could be another huge short squeeze waiting to happen.

Historically I don't see any other instance of 1 D ADX pushing more than two negative trends in a row. This would be unprecedented. To get a positive trend ADX we'll need to see another bigger move up which could happen if we break this descending trendline.

RSI also has typically popped above the current level after about 5 months of staying below it. It would be unlikely that we get a huge negative trend here without more of a move up.

Even though this market is still pretty bearish there seem to be a lot of people getting way ahead of themselves since we're nowhere near the "capitulation" phase of a bubble.

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So the near term bullish argument would be this:

1) 1 D ADX signals that we've completed two negative trends. It would be historically unlikely to begin yet another negative trend to make 3 in a row. This doesn't appear to have ever happened with Bitcoin (at least going back to 2013 on my Bitfinex chart.

2) RSI has stayed below 60 on the 1 D chart for about 5 months now. This historically has also been a sign that RSI/price will break higher.

3) 1 D RSI convergence will draw a stronger signal if RSI breaks higher here rather than dropping back off the 60 resistance line.

The near term bearish argument would be this:

1) We're at or near the top of the major descending trendline / channel from the ATH around 20k. This would be a strong risk/reward zone for a short. However, given continued weak volume, we could see a fairly prolonged period of slightly descending/sideways price action which would threaten shorts with a squeeze if there is a prolonged period of short accumulation without major price action. This would be similar to what happened when the price jumped over $1000 in 30 minutes last week.

2) We're probably still headed significantly lower (i.e. at least back to $6500 but most likely 5k-6k) given the 1 D RSI convergence signal that will likely need to be strong for a strong reversal sign.

This is how I would consider trading this.

1) Look for a break above the descending trendline. This top is now very close to where we're at in the $8100-$8300 range. An entry above $8500 on big momentum should still result in profit though maybe only 1/2 of the initial/total move but if this break happens we could see continued momentum to 10k which would be following the green trendline.

2) Forget the move above the descending trendline and look for a stronger RSI divergence signal off of the breakout high to take a short. This could be a very long wait however as the potential move could go back to 10k if we just follow this green trendline out to May 20.

Going short at $8100 now seems relatively worse risk:reward overall given the likelihood of a big dip back down based on the RSI and ADX mentioned.

If we go back to $8400 (or the "other" descending trendline since there is some ambiguity here over where the line should be) and start turning back on a decent RSI divergence signal then this could be a decent short entry as a potential double top could be forming. This wouldn't invalidate the general idea that we could go higher as we could break to $7100 before a stronger run up again.

So in the next month I expect a few good trading opportunities. At this price level we're in a bit of a no-man's land where it's not quite high enough without enough signaling to short with confidence and it's not quite low enough to get people on another big momentum push.

With literally no reaction to New York AG Schneiderman announcing information requests from exchanges we're probably in the clear for a while. Overall, to be safe, it will be best to take more bearish positions but in the near term we're probably trading within a range of about 7k-10k, which should provide some strong profit opportunities.

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Trading along the range circled could signal a longer timeframe convergence signal which could also be something to look for as a potential signal to enter. This would improve the overall risk:reward. A more conservative position could involve a hedge instead of a one-way trade.

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The market is starting to heat up in the order books and it likely has something to do with the intersection of a downward trendline with an ascending trendline.

A failure to break more up here could trigger a sharp decline back to the bottom of the channel. Not a huge move, but maybe 3.8%. Given the weak volume/liquidity right now it seems like it could go either way. The order books seem slightly biased to selling but are pretty even.

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I feel like I pasted the wrong chart or something.

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Yeah I pasted the same one I used from before.

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The trading range here is $8070-$8150 so not really a difficult level to defend. Bears might not get anywhere with this so it seems like we'll mostly continue to go sideways through this given the lack of much signaling either way.

It might be another 1/2 day of price creeping slightly higher before we get a strong enough divergence signal to turn this back down again.

An alternative though would be a strong move back below 8k, which gets us a trading range of $7750 to $8150. A break down here could yield close to 5%.

Shorts seem to be putting pressure now at $8100 with a fairly large sell wall between $8100 and $8130.

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Not seeing a lot of buying but this sell wall definitely seems to be lacking influence on the market as volume is going nowhere.

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We're nearly right at the intersection of these trendlines now and it's like being in the eye of a hurricane the volatility is really ramping up.

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But overall I don't see the kinds of large orders being placed that are typical of a big move.

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Despite the massive sell volume in the Ask it just doesn't make sense for there to be a ton of volume selling here. It would make more sense to attract sell volume to push the price slightly higher and signal a divergence.

So I'm just going to assume current market participants are not likely to start making a big deal over what appears to be a fairly small potential move either way. It seems like even though we're not in a triangle type pattern we're in a zone of diminishing returns which could end up being a bigger move up since a stronger divergence signal would require another move higher which would be a better signal for the market to sell.

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This is what the bizarre price action looked like on Bitfinex. I saw a market sell of 43 BTC and almost 10 BTC.

So maybe we'll see a breakdown here.

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I realized that I missed a big trendline which appears to be a strong resistance level.

This would seem to form a pennant that would be relatively bearish though the downside target would be around $7380-$7400 so decent profit.

I still think we'll test this line again since it's only been touched one time in this most recent move though a big divergence signal may not play out.

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The target would be inside the pennant though the overall target could be lower though again I think we're unlikely to see a huge move so soon.

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For some reason Tradingview has decided that this Bitfinex BTCUSD chart that I've been charting on is now "invalid." WTF.

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Finally a Breakout from the Descending Wedge, now Reversal?

15 min divergence signaled, which suggests we're probably moving higher given a failure here in shorts/bears to push things lower.

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That last chart was wrong. For some reason TV doesn't always copy the link.

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I guess that chart was wrong too because I pasted a 1 hr chart.

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I should add a disclaimer to what I said about going higher. Since there's a strong resistance level in the orange line we'll have to see if 1) the price gets to that level again, which seems likely, and 2) if we see a break above that line, which seems less likely. To get a stronger 4 hr RSI divergence we'd need to see this price get broken and then a move to the green ascending trendline.

A break above 60 on the 1 D RSI could be seen as a short-term buy signal but given the problematic resistance here, the very low volume, and the pump and dump price action from whales shorting the last time we were here I'm skeptical about a strong move here. Also, 4 hr ADX just completed a positive trend and in this bear market we haven't seen consecutive 4 hr ADX positive trends, which generally suggests a negative trend will materialize next.

Trying to project price action too far out seems to create a lot of ambiguity so I'm going to stick to focusing on the near term price action.

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Looks like we've crept up and touched off that trendline but no meaningful activity at the trendline. As we move through another zone of intersecting ascending and descending trendlines we could see some price action again but it could get very volatile on low volume and

We've now signaled 30 min RSI divergence so another bump higher here might be a longer timeframe divergence.

If this big 1 D green candle can stay where it's at and we see a tight reversal candle forming after that one closes then somewhere along that orange resistance trend line might be a good place to go short though a move above the trendline could trigger buying momentum.

We'll see what happens going into the morning and then the afternoon. Until then I think it will stay fairly quiet and continue trading along this upper channel line until the intersection in about 4 hours or so.

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Volume and volatility really picking up as expected.

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Even with this low liquidity I'm surprised the price hasn't broken down more. Clearly the push to nearly $8300 was a prime short/sell zone. The key thing here is there needs to be a somewhat bigger volume trigger. A failure to sustain a break above $8187 by tomorrow afternoon could be that trigger.

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Since price has broken up to the strong resistance line there's clearly a battle in the order books now as volume is increasing.

A break above this resistance (>$8310) could lead to a breakout though it might get turned around at $8500 depending on the volume.

The order books show strong resistance and support so it seems like relying on the charts for guidance will be useful.

With 30 min RSI divergence signaled we might get a dip here though this huge buy wall is getting some big trades now. A market buy for 24 BTC, 26 BTC, and almost 10 BTC went through while I haven't seen much selling.

With volume increasing this market seems increasingly bullish, especially with altcoins taking off.

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Almost as soon as I said that the volume started dropping off.

Big sell wall now pressuring price lower. I thinik we'll see some back and forth here for a while.

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In 2014 the bear market broke above the downtrend line to form a new, higher downtrend line that ultimately failed but stayed higher for a while. I'm inclined to wait here for a better opportunity even though it makes sense to go short at $8250. I want to see 1 D RSI really turn away from 60 or break 60 to confirm this one way or the other. The market clearly isn't enthusiastic about either direction. Huge buy and sell walls have failed to make much of a dent in price.

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Similar to 2014 we had 4 touches off the original descending trendline before a break above it. We're at the 4th touch off this comparable trendline in 2018.

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Despite what I just said I still think we need to see a move lower, perhaps to $7300 before another test of this trendline leads to a break higher so it still makes sense to short here with a tight stop. Maybe stop out at $8300.

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Just saw 4 orders selling 25 total BTC and a buy for 11.33 BTC. This market is really locked up though volume is increasing again.

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This 4 hr bars is right on the resistance line now. A close above this line could shift some momentum.

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Despite the momentum, we only saw a touch off just below $8400 and then declining volume. This would have been a short signal as well but now we're testing the strong support at $8270. 1 D starting to look like a reversal candle and all of a sudden the support has lifted off.

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It seems like we could continue to creep higher here since the risk:reward for shorting is probably pretty even with going long, i.e.about 1:1, so down $1700 vs. up $1700.

It looks like we're going to avoid the two lower area that I've circled unless something unexpected and dramatic happens out of the blue.

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It looks like by sometime tomorrow morning / afternoon USA time we'll be getting into another intersection of ascending and descending lines with the lower channel line of this recent ascending trend off the big breakout to 8k crossing the major resistance/support line that we're currently seeing price action on. Since we've effectively moved past a few major descending trendlines without coming anywhere close this top of the channel/major descending trendline could prove to hold the price for a bit until one side capitulates. Since a MACD/RSI divergence could signal on the 2 hr+ timeframes a break above $8400 there could be a push higher but it will be useful to look at a few other things in the near term.

The market has closed higher than the major resistance line forming a pennant/triangle but the breakout momentum was weak. 1 D RSI is still right at the threshold of where it has been turning away so this is still a prime zone (~$8400) for taking a short given that this is close to the top of an area of heavy resistance.

Still, lacking a strong divergence signal on once again declining volume, we could go higher. A 2 hr RSI Divergence could signal in the next 5 days if we hit the next area circled where a green trendline from Sept 15, 2017 crosses.

I had a few other things to talk about but I got distracted so I'll come back to it later when I'm more focused.

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We've had such low liquidity on GDAX in the last 5 or 6 minutes that the price actually gapped down to just below $8300 from about $8307. When it hit that $8300 threshold some big buying and selling happened as a buy for 17.34 and 6 BTC came after sells of 11 and 7 and a few others...

From where we're at down to the intersection of these two trendlines (~$8250) is only $60 so we could might see some big swings in the order book over the next 8 hours.

The problem with this low liquidity, low volume environment is that taking low reward positions that have a high probability of getting stopped out isn't efficient since market orders and margin require fees and if shorts have repeatedly failed and been stopped out then we could see a much bigger squeeze off this trendline.

With that being said I'm not convinced that sentiment has fully bottomed as Google Search Trends and On-chain transaction volume have continued to decline. The last big breakout was definitely partly triggered by a short squeeze, but even after that we're still at an extremely high level of shorts according to the Bitfinex shorts chart. We're at the same level as October which suggests some shorts have held on for losses or have yet to be stopped out. The last big breakout saw a reduction in shorts by 40% and since then we've only seen about 25% of that reduction come back.

Clearly, whatever momentum triggered that massive increase in shorting has clearly faded, which is probably why we've seen fairly steady gains since the breakout. Logically, you would think that shorts would see an opportunity here rather than close to the bottom where we were seeing heavy support.

Given these liquidity conditions we could see a similar scenario like before where we get a strong level of support that develops over time and some pattern or trend break that triggers a momentum breakout.

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This 1 D candle never closed as a reversal and now we're breaking out so this could get interesting. Volume is starting to pick up for real now and shorts are dropping while the resistance between $8500 and $8550 on GDAX has fallen off by a fair amount.

We'll probably see some sideways price action here as some will wait for a retest of this major trendline to see if this is for real.

4 hr RSI Divergence is now showing a possible signal so if the momentum sustains another run then that signal could get broken which could trigger another big move since $8800-$8900 is the next major resistance level.

It definitely feels like much of this volume is being driven by a short squeeze since the last big short squeeze saw so many ill-advised shorts being taken.

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1 D RSI is very close to breaking above the heavy resistance line of about 60 and this should be a clear buy signal if it hits 62.

Only in one instance where 1 D RSI hit 62 did the price not break higher and that was in 2014 following a big move above the major descending trendline off the ATH, similar to here where RSI broke well above 62.

Since bears appear to have become very cautious a combo of higher volume, short squeeze, momentum signals, etc. could break this RSI Divergence. But I would watch for 1) 1 D RSI hitting 62 and 2) a failure to break this green ascending trendline that's at about $8600 and 3) whether 4 hr candles confirm RSI divergence with some momentum which should take some time. We could see some good scalping opportunities between $8600 and $8400 in the meantime if the momentum breaks down below $8500.

It makes total sense now why there wasn't a breakout from the lows around $6500 earlier as many shorts failed to close their positions since there was an expectation that the price would break 6k and once those shorts got squeezed we got the breakout.

Now, when you would logically expect short positions to be taken we're looking at fewer shorts than before when price was significantly lower. This clearly points to an inefficient market behavior that leads to the sell high buy low / sell low buy high phenomenon.

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One thing that seems clear is that the level of short positions indicated by the Bitfinex chart has no correlation with what direction price is going to go. Shorts were being taken in big numbers in October then once they got rolled going into December they were too scared to short off the obvious psychological market high which didn't need a signal to breakdown extremely quickly.

With all this said the other strategy I mentioned before was to just wait out a solid level for shorting this current rally which should run out by 10k though 1 D ADX is now below 20 and DI+ is starting to turn up. Given this 4 hr RSI divergence I'd wait for a test of this support at $8400 since we could get a head and shoulders or double top here if this breaks down so shorting here is again, not a terrible risk:reward strategy since the 4 hr ADX positive trend ran out a while ago yet we haven't seen a reversal.

A hedged strategy here could also work well as you could go long and take a short with a tight stop based on risk reward of 1500:600 and just leave that as a longer duration hold if the market goes lower by taking a relatively small position size.

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Notably when the price broke the prior major descending trendline two positive 4 hr ADX trends developed consecutively.

Then, a longer duration RSI divergence also turned the break around, briefly, prior to a run up higher.

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If we hit 10k by the end of April that would be about a 50% gain for April. Clearly, there are still a lot of stupid people in this market as shorting below 7k generally seemed like a very stupid strategy yet I kept seeing it throw out there by popular analysts once we very clearly hit the bottom.

I even took a very stupid short when price broke $6500 because I thought we were seeing a momentum breakdown and I'd just woken up and was FOMOing into positions but that got stopped out pretty quickly and a long was taken simultaneously so it all cancelled out anyway.

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Once Bitcoin starts to signal a "top" in this rally an even better risk/reward strategy than shorting BTC will be to short XRP and BCH, which will likely see far bigger runs that will consequently lead to far bigger declines.

Already, XRP is up 21.5% and BCH 18.4% in the last 24 hours, perhaps because of short squeezes as well.

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So I guess the flipside to that is there will be also heavy speculative shorting which could result in even worse liquidity situations than with Bitcoin that could lead to stopping out of a position or having to hold on through wild volatility.

So the caveat there would be to have a hardened stomach or build a hedged position.

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I'm reading a lot of talk about how Bitcoin will break by the middle of the year, and based on Google Sentiment and extremely low on-chain transaction volume I just don't see it. If we had a seen a reversal off the first dip to $7400 when we were still above a major trendline then I could call the market having more of a "correction" than a bear market but given the huge push below that trendline and the massive failure to defend that trendline I have doubts that smart institutional capital will want to jump into a market that hasn't quite bottomed with 1 D RSI Convergence like in 2014.

In 2014 we saw a 50% move from a persistent low similar to what we saw around $6500 that broke the existing major descending trendline and then a failure to break the "next" descending trendline led to a serious capitulation leading to the final bear move so if we break to 10k I would expect a fair amount of hedging to lock in mining profitability for at least 3 months. If the price jumps up higher then we're almost definitely out of the woods, but if it falls by another 50% then there will be a lot of protected investments.

Also, unlike 2014, the break above the descending trendline didn't see any signs of 1 D RSI convergence signaled except for a short duration signal that lasted a few days and saw a small breakout. So we could be "close" to the end but in 2014 even after a strong breakdown lasting 18 days that signaled 1 D RSI convergence the market broke higher and stayed above that dip for another 2 months.

On a whole there should be a lot of opportunities moving forward trading both sides of the market.

It looks like $8550 could break down as US markets wake up so things could get interesting today.

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During the move from 6k to $11600 practically every red candle on the 4 hr chart was a buy opportunity. When 4 hr ADX finally signaled the positive trend nearing the top it was followed by a 4 hr RSI divergence signal which still didn't break the rally as we needed a broken inverse head & shoulders that turned into more of a double top to break the rally.

So it's important to distinguish between signals that lag and combine them with more precise indicators to understand where the price is going and when it's likely to happen.

All these idiots calling for a straightline to 6k must feel pretty stupid right about now.

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Speaking of that very sequence of peak ADX, followed by RSI divergence, we've seen 4 hr ADX peak on a positive trend (which would have been a faulty sell signal), followed by 4 hr RSI divergence formed over the last 7 days, which again, suggests selling, especially with 5 min RSI divergence being signaled, which in a sideways market, usually leads to a 1% or more price breakdown.

Since we've moved out of any clear pattern and we've broken the middle of this ascending channel off the previous big breakout I can see price moving slightly up bounded by the ascending green trendline and the middle of this channel. A break above or below could trigger momentum.

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Given the increasing bullishness of this market I would definitely look into entering off dips here. I don't have any specific trades mapped out since this break happened after I planned to go to sleep so I'm just going to wait and see but I think the hedged trade is something to consider. I'm not very knowledgeable about options but essentially you're building yourself some kind of options-like trade to better manage risk.

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Looks like we got another decent short squeeze breakout. Volume has now increased significantly and it looks like we could retrace this move a bit before seeing more action.

The market has definitely turned bullish as shorts are getting liquidated or closing positions.

1 D RSI has hit 62 so I would look for buying opportunities off dips like I said before at $8500 when we really didn't get a dip.

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We're now running along this upper channel line with a 4 hr close in about 30 min. A failure to close above the channel might trigger some selling. 4 hr RSI divergence has been broken which suggests this could take a run higher but waiting for the 4 hr candle close will provide more signs of the near term direction.

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This definitely looks like a place to take profit.

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Overall, given the bullish sentiment shift this is generally more of a buy and hold (or buy the dip if you have no position) market now though obvious large RSI divergence/signals should suggest taking profit or hedging.

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Bitfinex BTC shorts chart shows that short positions have receded back to the post-8k breakout level, suggesting bearish sentiment has weakened considerably despite what might be an optimal zone for taking a short position. If our trading range is 7k-10k then we're in the top 1/3 of that range now, making a short relatively strong risk/reward.

Given that volume has completely fallen off, whatever bullishness is clearly not bringing in new buyers, which would be necessary for a sustained run here. It's still possible we get another round of shorts getting squeezed as divergence signals are still on the shorter duration end of things.

Given the divergence signals I'd be wary of entering into new positions above 9k unless volume picks up again but I wouldn't be selling just yet. We should have some idea of whether this market will turn back a bit within the next 12-24 hrs.

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Google Search trends for Bitcoin show that we're looking at another drop off from the previous week, perhaps about 12.5%, suggesting that sentiment hasn't quite bottomed out like it appeared from the previous few weeks.

1 D RSI is only barely at 64 which suggests this run still has a ways to go given historical price action so overall technicals appear bullish even though volume suggests otherwise.

While it's too early to say how we would get to 10k I think the level of shorts is still pretty high, which suggests a lot of potential for another big squeeze. Going back to early to mid-March levels would result in another bump higher.

1 D ADX is likely to become a positive trend here but it lags quite a bit so I can see a fair amount of time (i.e. at least a week, maybe up to a month) before this turns back in a more sustained move.

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I drew out what appears to be a potential new channel that could indicate an area of resistance/support that we're approaching today. A failure to continue into this new channel would strongly signal a short-term reversal though it could be a weak one like before when we simply fell back into the original ascending channel.

My orange descending trendline here is a guess so we'll see if this ends up being meaningful but I wouldn't put much stock into it.

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Given the wedge type shape it would be relatively unlikely to see a breakout here. Combined with the 2 hr RSI divergence being signaled it seems more likely that we'll see a short term move back to the lower end of the channel.

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I think the "buy the dip strategy" can still be valid but given the RSI divergence, an ascending wedge looking pattern, and narrowing trading range I'd watch for a potentially larger more sustained downward move here with a confirmed reversal signal.

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A notably bearish indicator of where we are in the market is that on-chain confirmed transactions has barely been able to sustain over 200k daily transactions. In 2016 it was notable when transactions finally broke 250k. If we can see a sustained move back to 250k that should be a strong indicator that the market/network is once again healthy and people are actually "using" Bitcoin rather than only speculating/trading it. Until then, it seems likely that we will remain in an overall bearish market with most people looking at taking relatively short duration positions that are fundamentally bearish.

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If Bitcoin closes with a fifth consecutive daily positive candle then it will become increasingly likely that day 6 will be a negative.

The last time we saw 6 consecutive green daily candles was June 2017 then before that May and Feb 2017. In late May 2016 we saw 8 consecutive green daily candles when price moved from about $430 to $530. That move marked the end of the bear market as the market has never dipped below $530 since then.

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5 consecutive green daily candles would be a bullish signal, but 6 would be an extremely bullish signal. I just don't see the market being that bullish right now so I would be extremely surprised. Bitcoin Cash is being pumped like crazy and that is likely 100% speculative price action, which won't end well for a lot of people.

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During these speculative cycles there definitely seems to be a rotation between targeted coins that have yet to pump higher. First, it was Litecoin, and once Litecoin broke $150 we saw a lot of profit taking and then it seemed Bitcoin Cash and Ripple broke out. I haven't followed these closely but this seems to be a historical pattern when Bitcoin starts to flatten out or trade sideways for an extended period during a reversal/rally.

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5.5 hrs till the next daily candle closes. Staying above $8900 should keep this candle in the green. A break below $8900 would mean a failure to stay within the "new" ascending channel and could lead to a move back to the bottom of the older ascending channel around $8500. There are a few support zones along the way so that could take some time to play out (or not play out at all).

A strong breakdown back to the lower channel could lead to some heavy buying of the dip and strongly suggest a pennant/triangle forming up for another break higher.

Order books don't show a lot of support between $8790 and $8500 but we'd need a bit of volume to break below $8800 anytime soon. So it's a bit early still.

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It will be really interesting to see if my "fake" trendline actually ends up having some accuracy in the next 5-12 hours. I don't even remember now how I came up with where to put it so I wouldn't rely on it for anything.

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I wrote this yesterday but got distracted by something else so I'm just going to publish it.

I've been busy but a few comments here.

1) It seems clear that there was some selling pressure but the volume wasn't enough to break far below $8800.
2) The 5th consecutive daily green candle didn't close green, putting the brakes on a bullish trend.
3) RSI has now cleared 62 with the dip which strongly suggests based on historical patterns that we're still going higher.
4) 4 hr RSI divergence is signaling now over the last 4 days price action which suggests we have a few more days at least before a bigger reversal.
5) The most recent break higher was clearly another short squeeze as short positions on Bitfinex plummeted dramatically. It seems likely that misguided short positions being taken just prior to or after the move down to below $8800 were stopped out.
6)

Note

Given the previous statements we can now see that 4 hr divergence has been broken and 4 hr RSI has broken 80, which would be bullish if we continued to see repeated breaks of this level. This is generally a sign that the market is turning around because it's the first 4 hr RSI has broken 80 in this bear market. Last year's run saw 4 hr RSI brake 80 at least 6 or 7 times.

With that said 4 hr RSI also broke 80 during the 2014 bear market so I wouldn't put too much weight on this signal.

1 D RSI is now nearing 70 but as I'm writing this the market is already turning back pretty sharply as shorts are likely starting to build positions again.

Short positions on Bitfinex have risen since the move to $8900 so we can generally say that this last move was not a short squeeze and given the volume this might not be the best place to short.

The market has broken above the ascending channel from the last big breakout to 8k and now looks like it could form an ascending wedge between the top of the channel line and another trendline that may not be that significant but so far is holding some weight in turning the market back.

Another short squeeze in the coming days will definitely bump us to 10k but I'll have to look at the charts to see how this could play out. In general though my chart has been reasonably accurate in predicting price action, except more conservative in the timeline.

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I probably should've identified this fib level coinciding with this trendline as a place where the price might move to but the timeline didn't really match up but with $9572 being the .382 fib level we've hit a notable resistance area though this could be a relatively less important than other signals.

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I was going to say something about 1 D DI+ breaking 40 being a sell signal but I'll have to spend more time looking at this since I don't have time right now. We're getting 15-30 min RSI/MACD divergence off this resistance area/trendline so if it turns back towards the top of the ascending channel then we'll potentially have some good short duration opportunities if this wedge holds. The risk here will be that it fails to hold the top of the channel but that seems unlikely in the near term.

A short here would probably be good risk:reward with a target being the top of the ascending channel around $9300. If you're laddering into a larger short position then perhaps you only take 50% profit on that target though there are a few variations on executing this. If you decide to go long at $9300 then you're hedging the other 50% of the short position so if it breaks back to the top of this pattern (or higher) then you've fully hedged for that and you can leave it open.

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Looking back at how I drew this upper ascending trendline it seems like whatever I used to draw it likely should have been revisited because it doesn't seem to line up with how the market is moving, but most likely I should have reconsidered how it was drawn. One of the things can lead to big problems is when you don't question the validity of trendlines that were drawn poorly.

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Overall, the short call appears to have been accurate but it remains to be seen whether this is actually a wedge that is forming. I'll need to look at this. Despite a build up of shorts this reversal appears to have led to a decrease again in short positions. So rather than a squeeze we saw a decrease in short positions during this sell off. At least that's what seems to be the case just eyeballing it.

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The market turned back right off the 1 D RSI hitting about 70 which suggests that this run could still pop higher from here though the recent short activity doesn't appear to have any correlation with price action.

After looking at my trendline I realized it was the March 2017 trendline that we fell off of a while back. A break above this level would be significant which would explain why we saw a big bump in volume. A tiny potential wedge wouldn't necessarily hold back a huge surge in volume here.

With that said, price action has generally stayed within the anticipated trading range within about 1.5% higher/lower.

Note

Any longs here should definitely use a stop even if hedged so that you preserve your profit (overall profit) should a break lower occur.

We're now about 1 day away from intersecting ascending and descending trendlines, which could be a support should we see a break lower here. A 4 hr close below the upper channel line or a failure to move back to the March 2017 ascending line might see a rapid drop to this lower channel line/intersection within the next 12-24 hours.

Now that we're back in a kind of 50/50 zone an ideal position would be hedged like I had suggested previously but FOMOing in either way would be risky. A hedged position initiated here (buy and sell) would be betting that the market will move significantly but given risk:reward of about 1:1 on either position a one-way trade doesn't make any sense.

With that being said, I'm not sure I would recommend any new positions at the current price just below $9400 since there are a lot of ways to mess it up and lose more money than just doing nothing.

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"Significantly" being > 5%

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within the next 5-6 days.

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As predicted, the volatility for Bitcoin Cash skyrocketed as soon as BTC took a turn. So rather than shorting BTC off expected dips I would aim for BCH, XRP, and a few others that seem to be overbought off the next "top".

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XMRUSD fell about 9%.

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This is relative to Bitcoin falling about 3-4%.

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With that kind of volatilty comes a lot of risk though. XRPUSD bounced down 16% but also bounced back up by 6%. So net loss was under 12%.

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Also, I'm not trading any USDT pairs so I'm not even sure if there's even much short volume available on these relatively illiquid pairs. Kraken doesn't allow margin trading BCH or XRP.

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On the 5 min chart shorts seem to have bottomed out for the moment from closing positions. If we see a misguided increase in short positions here near the bottom of this potential pattern that might be an indicator that another squeeze is possible in the coming days if volume drops off significantly (i.e. by 2/3 from now).

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As predicted, we got significant price action based on the chart and a hedged position with stops would have been profitable (or at least break even) based on using the chart to calculate risk:reward. A short position initiated closer to $9700 would have been protected with a hedge at $9300 though again, getting the position size for stopping out can be tricky here. This is something I need to refine based on more knowledgeable traders/common knowledge as my hedging practices are rudimentary.

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Given expectations of a move back to around 10k taking some profit now and/or hedging will protect the short position.

After a big drop off in short positions getting closed we're starting to see a bump higher again, as predicted, though it remains to be seen if a build up here will push a squeeze. We'll need to watch the volume which is fairly high right now so shorts are probably still scared of this "bullish" rally.

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I added some additional channels to my chart. Clearly, the price action fell out of the ascending blue channel, which is fairly old, and that led to a rapid fall back to the predicted area of support.

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By fairly old I mean it goes almost back to the big breakout above 8k.

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With a very new descending blue channel here we can also see if price action goes up only to get stopped at the upper channel line. This would signal a potential place to short if the move falls short of the targeted area.

Alternatively, if we fail to see a break higher and price breaks below the bottom of the blue channel line / orange resistance/support line then we could see further losses though that seems relatively unlikely given that 1 D RSI broke 62 but turned around at 70. Historically we've seen much more bullish price action after breaking 62.

There are probably a few other things but I don't have time to look into it right now. Generally we might go a bit lower than where it is at about $8927 right now given the trendlines and the lack of convergence signals.

I'm really wishing I had made a plan to short XMR after it broke $290 but I'm confident we'll see another opportunity. If we get a "double top" again as we've seen in the past this would be a strong selling signal to the market but given the volume a lot of people are "buying the dip."

Note

1 hr RSI/MACD convergence signaling here but 4 hr candle is 2:44 away from closing below the bottom of this new descending channel. Another break lower could be triggered by a 4 hr close below the two channels near the current price of $8735 down to the top of another ascending channel around $8350.

Short positioning has remained on the lower side so a squeeze here doesn't seem likely.

Given the fairly long duration convergence signal we might see some consolidation into a pattern here before another move.

I'm too tired to think so I'll have tor revisit this.

Note

I missed a buying opportunity below $8700 but volume and momentum appeared to be falling off for bears while buying pressure started to increase but it seems increasingly likely that the 4 hr will close above the trendlines, opening up a possible run back to the intersection of the upper channel lines of the pink and blue channels by 4/27 UTC 4 pm. A move back to this level, about $9500, would probably trigger big volatilty in altcoins.

It seems like much of this downward move has been profit taking and the overall market still seems bullish (for now).

The $8850 level looks like a good place to go long as we're right near major support but entering the broadening pattern we could see a fair amount of volatility which would make setting stops tricky since you could get stopped out just below a move back up. It might be a safer bet to look for an entry off the bottom channel line of the descending blue channel, perhaps $8700-$8800 though I'm not sure $8700 will get touched again.

A possible strategy to pick an entry would be to look for a 5 min RSI convergence signal indicating a bottom that coincides with the blue lower channel line if the overall price action starts to go sideways.

I'm getting too tired now so better to get some rest before making any decisions. The charts suggest we might see a stop at $9100 on the way to $9500 if we can break back above the green resistance line.

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As predicted we got a little bit of volatility which would have created a better entry but then the market bounced higher since we're still generally in a bullish trend.

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Having passed through this $9100 intersection zone with a failure to hit the next stop and with severely declining volume this rally could fall back but it seems unlikely to move back to the previous level given that it would need to break 4 support lines to go back to the blue lower channel line around $8700.

Short positions have steadily ticked up about 6% the last day and a half so the potential for a squeeze is starting to build again should volumes fall off to previously low levels.

4hr RSI seems to suggest we can go higher from here to signal divergence as 45 min divergence is now signaling.

The pattern that's emerging now is a sym triangle/pennant with $9311 being the midpoint so we're close to the middle of pattern though it seems unlikely given the timeframe that the price will breakout here suddenly in the next hour to hit the upper target. It seems equally probable that we see a move back below $9100 here or a move up to $9400 as shown on the new chart.

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A move back below $9100 could trigger buying/volume/momentum based on the triangle and the notion of continuation as a move through the next zone at about $9400 could break higher to near 10k.

Given that this lower target appears to be over a day away this would work well with the idea of a 4 hr RSI divergence signaling on a breakout to about $9700 followed by a few days of creeping price action that takes us to 10k.

The last part is a total guess as the trendline drawn through there is not based on anything so again, a "fake trendline" that seems like it could work, that I drew at least a week ago.

An interesting observation I made earlier was that shorts were dropping as price was falling, which suggests that shorts taken earlier were being closed given an opportunity to break even or take profit, resulting in stronger support on the most recent dip below $8800. That doesn't necessarily signal a bullish market but one that's balanced but now tipping back towards bearishness.

A lack of momentum in either direction could tip things a bit higher or lower but it seems unlikely we'll see any huge moves anytime soon.

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1 D ADX has turned up above 20 signaling a possible overall positive trend forming. Overall, the market is still bullish enough to keep price bumping higher for a while. I would wait for DI+ to hit 40 and a 4 hr RSI Divergence signal before considering a bigger reversal, which could take up to a month. Or at least a good short opportunity near the top might take a month (or slightly less) to signal.

Shorts rushing in now with no momentum/volume could get squeezed and push things higher in the near term.

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It seems like we're now in a 5 min RSI trading zone though only two good trading opportunities were triggered in the last day or so which isn't particularly great but explains why volume has fallen off significantly.

I would look for diminishing returns that lead to even more volume falling off before another volatile move.

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4 hr ADX has fallen below 20 after 2 consecutive positive trends above 40. This strongly suggests the next trend will be negative but it seems likely that we'll get some sideways volatility prior to the next trend given the 1 D ADX still waiting on a more definitive trend signal. This would be similar to mid to late August 2017.

Selling above 40 ADX on the 4 hr chart would have been a good trade but there were probably a few other signals there. 1 D DI+ breaking 40 will signal a good selling opportunity but it's still too early for that to be meaningful.

Price could be at 10k or higher prior to a definitive reversal. Until we get some better signals of where the resistance is on this rally there will be opportunities. I've drawn a new potential resistance trend line that could indicate a "top" though it seems like we could go as high as near 11.5k using another trendline.

We should get some indicator soon of how to draw this line.

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I'm not sure where I got 11.5k. It looks more like somewhere between 10k and 11k will be the "top" end of this rally though 10k makes sense as it will be a move of about 50% higher from $6600. 11k would be 66.67% higher.

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price action has been quite a bit more volatile than I expected.

On Bitfinex there clearly appears to be some very bizarre liquidity conditions as evidenced by this chart. GDAX price action wasn't even close to this trading range.

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The time zone is UTC on that chart.

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GDAX did see (at 5 AM EST) a flash crash from above $9300 to below $9070 in a span of 2 minutes, but those were probably arbitrage bots being driven by the Bitfinex price action to sell.

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In retrospect 5 min RSI trades could have been profitable but it wouldn't have worked for very long as price fell out of my expected trading range so that call really didn't make any sense.

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It seems like this triangle/pennant has failed to breakout and that led to a sharp sell off back to this lower channel line and we're now creeping into a possible sideways, low volume pattern that would invalidate this triangle/pennant.

Volume has fallen off significantly and short positions have somewhat increased though still not to the level post breakout to 8k so overall, the market isn't particularly bearish so it seems like we will be looking for either a failure to stay within this new ascending channel (blue) or look for a breakdown below the upper line of the bigger descending channel (also blue).

In general, this looks like an optimal short area as risk:reward generally will be high as the lower line in this channel ranges between $8400-$8600 in the near term (3-4 days) while a relatively tight stop could be used if the price action breaks out the other way since we're at the top of this channel.

At the current price near newer lower channel line it will probably be worth waiting to see if the price bounces back to the upper channel line to allow a much smaller stop. If we see a break below this channel line that puts you into a bit of a no-man's land that doesn't provide such a great risk:reward. Given that bearish sentiment still seems relatively mild I'd wait for the optimal entry at the top of the big channel. Should price creep along that line lower then you can set your stop in the money should a breakout occur lower along this line.

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The upper channel line target is about $9360-$9370 so we're not that far away at $9310.

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Another possible price action would be a creeping move towards the intersection of the ascending channel line and the descending channel line which happens in about 13.5 hours so by Monday morning, which tends to see bigger volume moves, we might start to see some indication of which direction the market wants to go.

I wouldn't take a long position there given the risk:reward isn't particularly good for longs with a target of about $9900.

In retrospect the short I was discussing at about $9310 would have been an ok entry since a breakdown around here would still have been a good risk:reward of about $50:$290. Should a bounce happen off the ~$9020-$9050 level then some profit taking could happen and/or a hedged position could be taken, basically eliminating risk from the trade with the right stops.

So short at $9310, stop $9360, if price moves to ~$9050 then take profit on 1/2 and open long position on equal of remainder with stop set close to entry price.

If price moves back to top of channel ~$9340 where the intersecting lines happens then you can short again the half that was closed with a stop set to maybe $50 above the entry price.

Should this price action play out then the long position will be risk-less so the stop can be somewhat more generous. There's probably a more precise way to calculate this but I'm not actually trading right now so I'm just talking to myself... (i.e. this is not trading advice).

Note

It seems we've broken the bottom of this newer ascending channel and hit the lower trendline for the ascending channel formed after the break to 8k.

Here we might see tight price action on diminishing volume given the weak volume of the last breakdown but another break down here might drive the price down to the 9k something level discussed previously.

As I had said previously, the $9310 level was probably as good of an entry point given the timeliness of the commentary. Now at about $9210 you're kind of in the middle of this range where it's plausible to see a slow creep back towards $9300+ or a breakdown to around 9k.

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I won't comment on the price action since my last comments since we generally saw both scenarios play out with price creeping up and then breaking down to about 9k.

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Despite a bump in volume on this breakdown the momentum wasn't sustained below 9k and we're waiting now to see if the price will break back above the green support/resistance line.

1 D ADX still suggests this pattern will stay at least sideways or move up some more. I'll have to check it out later as I'm getting too sleepy.

Note

With volume falling off dramatically once again and short positions building since April 30 we could be looking at another short squeeze possibility as the level of short positions remains relatively high compared to levels in early March.

One thing I forgot to note earlier was that the last cross of this green trendline saw the price break three times before finally breaking out.

Now that we've seen a move higher on the third touch we're only seeing very slight divergence so it seems like touching off the top of the channel would be a plausible place for reversing.

As I had expected, the breakdown to the middle of this channel has presented a reasonable buying opportunity (both at or below $8900) though my expectation was on a somewhat faster timeline.

Should this triangle pattern play out then we should expect a volume/momentum breakout off this top channel line, which at $9130 is only about $100 away.

This would again be a promising place to run a hedged position as we've now failed to break this upper channel line 4 times and a 5th failure could signal an optimal selling opportunity though a lack of momentum could limit the downside to just sideways price action through this pattern.

Given the low liquidity it would be risky here to take a one-way trade, but if you made profit selling/shorting above $9300 and made profit going long below $8900 then you should be in good shape and hedged already for the next move which should be relatively bigger than the ones we've seen more recently.

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some very blatant moves now to pressure the market lower don't seem to be working here.

Note

It seems like we're getting close to the bottom of a major (somewhat hypothetical) channel line. Wherever the price moves off of in the next few days to help define this lower channel will likely be a good entry. In general it makes sense to be biased long here with a breakout expected in the next 2 days (by May 4).

With that said the 4 hr ADX seems to suggest that this more recent negative trend has a bit of room to run. I would follow the price action over the next 12+ hours to see if it respects this hypothetical trendline. If it doesn't fail there that could be a signal for being long.

Note

On the 4 hr chart there's about 50 min left before the candle close below the green support line. A break back above this line could trigger a breakout though a break below might see support at around $8900.

Note

The market found support at a slightly different area than the previous trendline (which wasn't a major line)) so I made an adjustment which can be seen between the circled area and where the line/bottom channel line has been moved to.

This channel line represents the bottom of the channel that the market has been in since the first dip to below 7k.

Note

Shorts have noteably increased with the most recent move up which makes sense given that we're touching off the top of this blue descending channel again, but it makes sense for this to be hedged as I've been recommending since the last cycle of price action off the top of the channel.

Given where we're at now the market definitely seems more likely to bounce higher and a short squeeze with low liquidity could be the trigger though generally speaking the market seems biased to go higher here.

1 D ADX has flattened and DI+ has dropped back to 20. I would look for DI+ to hit 38-40 before shorting with confidence. 4 hr RSI looks like it could hit 70+ with a move to near 10k which could be a strong divergence signal. Watching a top form here would be a clear signal to sell.

Overall, the market seems weak but it's still bullish enough given where the price is that you won't attract a huge volume of selling unless it makes sense based on indicators and the overall indicators suggest a move back above the previous high of about $9800.

The big disclaimer is that the market probably will become even more bullish above 10k so it could be premature to focus on shorting there as indicators could suggest divergence at an even higher price so there should be some relatively clear indications that this rally is turning around.

With the price at about $9200 the risk:reward is getting very close to 1:1. As price has managed to stay above the upper blue channel line (just barely, as I write this now $9170) we're getting very close to where a decisive move could happen to ~$9500 (the next ascending channel line above) or ~$9350 (the midpoint of the descending blue channel).

Given the poor liquidity we're starting to see a rather significant spread between exchanges as Finex and Bitstamp are trading above $9200 and GDAX is at $9160.

Note

In my previous comment I misstated $9350 instead of $8850 but that's irrelevant now as it has broken towards $9500 having failed to break back below the blue channel line.

Note

With the breakout moving into the original post 8k breakout ascending channel we've now seen a bounce off the middle of that channel signaling a 45 min divergence followed by a rapid sell off back to the bottom of the channel (and even below though that move was only for a few seconds).

With 4 hr divergence still possible we should see another move higher from here. The big pattern forming could be an ascending wedge which would be bearish combined with the bigger divergence signal. A strong move to break the divergence signal could also invalidate this wedge.

Note

What's kind of funny is that my imprecise ellipse has encapsulated the recent price action very accurately which was probably coincidence as I was trying to fill that space between the major March trendline and the bottom channel line.

I've added another trendline to indicate the more recent trend between the two lows along this ascending post 8k breakout trendline indicated by dark green.

Note

Shorts have backed off a bit, 1 D ADX isn't yet at 40, 1 D RSI has broken 62 but price needs to go higher to signal divergence. 1 D/4 hr RSI would need to see price close higher than $9643 to begin signaling divergence.

Generally, seeing higher lows should indicate strong support along this bottom channel line. A break to the middle of the channel would be about $9900+ and a break to the upper channel line would be close to $10,200.

Staying within the bottom channel line or the green ascending trendline could suggest an ascending wedge pattern. I would take a hedged position off the top of this pattern since we should be close to some strong sell signals but a break above 10k could lead to even more momentum and volume.

Note

Some considerations given the most recent break to nearly $9900 then the retreat back to below $9500.

1) Shorts have fallen off dramatically, signifying a weakening of bearish sentiment in the short market (Bitfinex) and/or a short squeeze driving much of the recent price action followed by profit taking rather than shorting leading to the dip in price.
2) 1 D RSI is now signaling convergence though just barely because the move was about $200 higher over 10 days. This should indicate that a higher high should be possible though caution is warranted as a stronger reversal becomes more likely though breaking 1 D RSI convergence with a sharp breakout above 10k could invalidate this.
3) 4 hr closed below the bottom of the big ascending channel from the bottom of the big dip but reversed back above though over an hour is left before a close higher.
4) A trend line from a Mar 21 peak to the recent peak at $9700 clearly provided strong resistance at the recent high below $9900 as well and this has led to a break out of the post 8k break channel to the bottom of this bigger channel from the recent bottom of the market.

Note

I meant to say "divergence" not "convergence above.

Note

I wasn't able to trade/follow the market so carefully since we went on a trip. Some previous comments were lost on another device but in general I was skeptical we would see a move through every ascending support level given the lack of short activity but now here we are at the bottom of this big blue channel from the post 8k breakout.

In the last day though shorts have spiked, which seems reasonable though given that the previous price decline was a combination of profit taking and panic selling on fairly steady but relatively low and now declining volume, this bump in short activity seems to be an overreaction rather than bearish sentiment since we saw declining shorts near the high and increasing shorts at the low. Should we get into another low liquidity scenario combined with rising volume this big jump in shorts could easily lead to a breakout off the bottom of the last major ascending channel.

A break below the bottom of this channel could lead to sustained losses so a hedged position makes sense here with a careful stop loss either way.

Note

If the short from the last touches off the top of this blue channel was kept then this would be an ideal place to take 1/2 profit and setup a hedged position biased long.

1 hr to 4 hr charts are relatively bullish. 1 D is overall bearish but the most recent 4 hr divergence was relatively weak.

At the current price near term risk:reward is fairly even with upside to about $9400 at the major green ascending line and the top of the descending blue channel below at about $8850-$8900.

Should price breakdown into this high volatility zone below the ascending channel and above the descending channel then the current price would be an opportune place to short with a very tight stop though it might be better overall to just wait for a break either way on momentum rather than mess around with complicated trades.

Note

Having said that a small breakout from $9060 to $9200+ appears to be reversing the current trend though without much volume it's too early to confirm anything though a continued move above the green trendline will be a strong bullish signal.

Note

Despite breaking down into the "volatility zone" discussed above the move ran out of momentum to hit the descending channel line as 9k support in this zone was sufficient to push price back into the ascending blue channel.

Short activity has tapered off/moved sideways so the market seems uncertain about direction but generally seems less bearish than the most recent price action would suggest. With the bump in short activity having generally failed some of the recent shorts could be sitting on open losing positions that weren't closed despite the move below $9100 due to a lack of significant profit since that boost in short activity appeared to happen below $9200. This would suggest the possibility of a short squeeze type of price action moving the market back to the next major level at about $9500.

Given the lack of clear patterns or trendlines guiding price action and mixed indicators from 4 hr / 1 D charts we might see some triangle/sideways price action for a while before the direction becomes more clear.

Note

With the relatively low volume/liquidity the order books were heavily spoofing around $9250 with heavy sell pressure followed by an increase in price. There definitely seems to be an ongoing battle between exchanges and constantly evolving unscrupulous bots.

Note

The 1 D has managed to stay above the bottom of this ascending channel. A positive close here could be seen as a buy signal to push the market back towards the top of the channel or at least the midpoint.

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A bounce here would be a positive sign but given the poor volume and lack of momentum and sentiment we could be seeing a H&S forming so this midpoint of the channel would be an ideal entry for a short if a higher short position hasn't been taken already.

Note

RSI is ambiguous as 1 D is back below the ~60 level that signals bullishness with the last break above 62 failing on a combination of hitting resistance at $9900 and 4 hr / 1 D divergence signaling.

1 D ADX never hit 40 (or got that close) so this reversal still hasn't quite had a strong positive trend which suggests an overall market that is still very bearish. Caution would be warranted in this area of the market though overall given low volume/liquidity there just doesn't seem to be much supply for a big move down so we could continue to trade into a pattern/channel for a little while longer.

Note

starting a new idea as this one has run its course

powderpc

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