Bitcoin and why I think the bears are still in control right now.
I’d like to start this off by stating that this article is based solely on my own charts and TA. It is merely my own opinion and it is neither my intention nor my goal to give financial advice.
My goal is to guide you through how I approach charting an asset, walk you through my process and reasoning and show you both the bull and the bear side of Bitcoin.
Whenever I chart something I start by looking at the highest timeframe first.
For Bitcoin this is the monthly:
Trend: Bullish, signified by price riding the 8EMA since the end of 2015.
Whenever Bitcoin moves too far away from the 8EMA we’ve had a month or two of consolidation/pullback until it caught up, followed by a touch and a move higher.
Bitcoin is still quite a bit extended and for another touch to happen it has to either:
I) Retrace to ~8100
II) Consolidate in this area for 2 more months.
We’re in the middle of this catch up period, Bitcoin just went up too far too fast.
I attribute most of that move to the unfounded futures hype that we’re now slowly digesting.
Obviously this EMA won’t hold forever but as long as it does the monthly Bitcoin view remains incredibly bullish.
Next up is the weekly chart:
Trend: Neutral leaning bearish
Bitcoin bounced on the 0.5 Fib of the entire 2015–2017 bull run in combination with the 21EMA that has been strong historic support.
If this bounce takes us above 12300 and we get a weekly close there I’m going to get significantly less bearish.
If the EMA and the Fib should fail however the next significant support on the weekly is at around 7800.
Everyone loved the parabolic Bitcoin on the insane run up to 20k but ever since it broke, the people promoting it have either gone silent or have failed hilariously at redrawing it.
As @PeterLBrandt said a parabolic break isn’t an insignificant event and we most certainly have historic precedent for what happens once one occurs.
I’m not saying we’ll get a 90% crash again, but staying cautious and managing exposure/risk never hurts.
Then comes the daily:
The daily is the most interesting and the most important chart right now.
While the fractal obviously doesn’t have to play out it still visualizes nicely what I’m worried about.
I see a lot of bullishness on social media but for me the daily chart shows several signs of weakness still.
I) 13/49 death cross
II) Bounces getting weaker
III) Lower low candle closes
Once we print higher highs on higher volume, the death cross turns into a golden cross and breakouts stop getting dumped into I’m going to consider going bullish on the daily.
Until then I stay more cautious with any long term positions.
Now that we’ve outlined the significant areas on the monthly, weekly and daily chart we can combine these with a chart on current price action to find our levels of significance.
Making predictions on future price is incredibly difficult but it’s important to listen to what the chart is telling you.
If the amount of bearish signs increases and bearish patterns start breaking down instead of up it is highly likely that a paradigm shift happened.
That’s what Bitcoin is currently going through.
Rising wedges aren’t running wedges anymore, breakouts don’t lead to new all time highs anymore and bearish news lead to massive crashes.
This is why I promote taking profits so often, if the worst case happens you’ll be left standing and if it doesn’t you miss out on some profits while having peace of mind that no matter what happens you’re well protected.
I’ll leave you with a chart I made weeks ago, the timing of the Bitcoin crash did strike me as odd and still does.
There is no reason to sell people cheap Bitcoin if they’re going to buy it at whatever price you offer it to them to buy altcoins with.