July 17 - Updated
Current Trend Status:
Near Term → bullish off the $1835 bounce to $2350 to $2450
Intermediate Term → bearish in a confirmed downtrend
Primary Term→ bullish on the macro big picture view
Summary:
Let me just start off by acknowledging that Bitcoin, Ethereum and many other of the most prominent cryptos like LTC even XRP is in a giant massive uptrend, on the PRIMARY TERM TIME FRAME...aka macro time frame. We are absolutely excited about the opportunity that is here in the crypto space just like all of you are. We're here for the infrastructural revolution in blockchain tech and certainly the moon-shot opportunities that cryptos consistently yield in their bull cycles. And that's the key phrase right there that we'd like to focus on...BULL CYCLES. Cycles in general. There are bull cycles and there are bear cycles.
This is very important concept to distinguish so lets go over it real quick as it's fundamental when we're distinguishing the trends. There are micro trends and macro trends.
So there are 3 MAIN TIME FRAMES when looking at any of this.
1) Near Term Time Frame - hours & days on a chart
2) Intermediat Term Time Frame - days to weeks, even months on a chart
3) Primary Term Time Frame - weeks months, even years on a chart
Like right now for example on Bitcoin...just because a bounce occurs doesn't mean that it's party time and all systems a-go. The trend may be up on the near term but down within the intermediate term time frame. What this tends to mean is that micro bounces are susceptible to getting sold off if the larger trend is down.
Right now Bitcoin put in a reversal bottom only on the near term time frame. Right now the trend on Bitcoin has been bullish since bouncing off a low of $1835. However, this bounce is squarely part of a larger overall downtrend that Bitcoin is in....this is very important to distinguish. Take a look below:
And now when we zoom in, we can see the near term time frame is definitely bullish:
So this bounce that's occurring is the bounce we discussed earlier ...and it's very much like the same bounce we saw on ETH from $204 back up to $320 before a resumption of the selling. If you recall back when ETH was trading around $350 even, we said the downside target was around $200. A week later that target did indeed get hit to $204. We vehemently warned members about the next stage that almost always happens in strong downtrends
The FEEL-GOOD RALLY or a BILLY RAY RALLY
And this is the important part to remember: Before we ever even cracked on ETH we laid out a post highlighting the downside targets of $200 and then we'd very likely see a "mother of god " / feel-good rally back up to the around $320 to $330. We warned members not to get too excited and to distinguish that it would feel really really good when that rally came. We put a high emphasis that it was something that would feel like the worst was behind us and it was time to party all over again. We warned to not trust that rally ...its going to feel good and we need to be vigilant about selling positions in that area from swing setups or for any new members just then joining to lighten up if not sell entirely. Feel-good rallies happen in spades during downtrends. So please remember that. When you see the crypto forum/social space pumping cheers with their fists up to the moon...just remember that. They're not paying attention to the overall other trends. They're operating off stuffing their intellect with reddit posts & twitter feeds and getting their hands on all the crypto & bitcoin news they can get. We read a lot too. We know there's some great stuff from Bitcoin.com to reddit and twitter. We know there's some serious talent in the space that says things that very much disagree with the TA (technical analysis) that we're observing:
There's no shortage of intelligent people in the space that are reveled in Bitcoin & Ethereum's future. We are too. But that doesn't change the technical setup that's occurred on this topping pattern, not by a long shot. We're here to trade what's in front of us. Not based on the hopes of gut forecasting on a gambles bet that this might be the area...I can feel it.
So this current bounce on Bitcoin is how they suck sideline money in...thru the feel-good rally. We're in a downtrend on the intermediate term time frame & an uptrend on the near term time frame. see the difference? Downtrends do this...they up and down...up and down...going down.
Now the bottom will eventually come. Let's for a moment imagine everything works out great with the Bitcoin fork of Augusts 1st and all things SegWit integration. And we see this rally get all the way up to around the $2400 area.
That whole move will still need to contend with the larger macro top that has occurred.
This a significant symmetrical triangle pattern and a breakdown of this move has a high probability outcome of fulfilling it's measured move target which rests around the $1370 area. Take a look below:
Does this target have to happen: NO Is it likely to happen: yes, based on the setup, the statistical probability of this outcome being fulfilled is high. We respect these setups when we see them. More often than not, when you see this setup occur, you step out of the way.
This is the same methodology we’ve applied to every one of our measured move targets. So far all measured move targets in this downtrend have been hit. Everyone without exception. Inevitably that will change.
Why do these breakdown patterns have an outcome of reaching their mesured moves....why can't it go higher just yet. The answer to that has a lot to do with supply. Don't underestimate the supply above all this. Everyone who bought higher is in pain and there's a lot of nervous energy in crypto right now. It wants to be whole again. This will put pressure on the intermediate term time frame. So if we see a rally up to 2300 then a pullback to 2k on light volume then a revisit of 2300 again on strong volume....and lets say it breaksout above 2300...then that will be a long signal. I know everyone wants to buy it lower, not higher. But the risk is you buy here and ride it down to that 1300 which is the textbook messured move from a break of the symmetrical triangle that we highlighted. As of now, we don't have a target for anything lower at this point. We're likely to see bitcoin tag the $1300 area sometime next week. Then build a reversal pattern off that bottom range. Like i don't think we'll ever see BTC sub 1000 ever again after that.
Here is a potential outcome of how this can go...this will really help hone your eyes on whats actually possible:
That is a possible outcome. We're not saying that's exactly how it will go...its just a reference to bring some perspective. Notice that in this current bull cycle everyone is starting to feel good that maybe Crypto is back. Notice how high Bitcoin can get with the current market sentiment.
Let's also discuss another important metric why Bitcoin is very likely going to tag the $1300 area. This is a very worth metric: there has not been one instance in Bitcoin's entire trading history where a "pivot high" was not eventually retested. Not once in its entire history. In other words, every near term or intermediate term top that ever occurred on Bitcoin...when that top was surpassed eventually....that top was always later revisted AFTER being passed. Take a look below:
The pivot high we're referring to the last yellow circle on the right. This veiw is just showing Bitcoin from March of 2015 to present but when we expand this from inception...it's the same pattern we see here in this image above. Every pivot high that ever existed on Bitcoin was eventually retested. Tagged and then moved higher. So this is yet another piece of evidence in support of the these thesis that Bitcoin will very likely tag the $1300 area before a resumption of it's larger bull trend.
Another piece of evidence why $1300 is very likely to be hit has to do with the fibonacci retracement value of 78.6%. Take a look below:
This is not a random number. For those new to Fibonacci please review here. In Fib analysis, there is a sweet spot level where all rallies tend to give a portion of their gains back. Even in an uptrend retracements almost always occur. In the stock market, the FRZ (Fibonacci Retracement Zone) that is most commonly hit is anywhere from 38.2% to 50% to 61.2%. Sometimes they retrace deeper to the 78.6% level in bearish environments and sometimes they retrace the entire rally and tag the 100% level...which is a complete reversal of the entire rally from pivot low to pivot high. In crypto especially, since the trading swings are much more volatile than the stock market...even in healthy uptrends we see the deeper 78.6% rally get tagged almost every time. Again that's in really bullish crypto environments. In fact...we even see the 100% retracement value get high on many of the alt coins.
So here on Bitcoin, the 78.6% retracement value from the pivot low of March 25 to the pivot high of June 12, sits squarely at the $1370 area. Isn't that convenient? So these alignments are not coincidence....they happen over and over and over again on the charts.
Again, so now we have 3 major confluences why the $1370 area is a high probability target
1) Symmetrical Triangle Breakdown = Measured Move of $1370
2) Every Pivot High Has Thus Far Been Reached. Last Pivot High is @ $1370
3) Fibonacci Retracement Level of 78.2% rests at $1370 area
So those are 3 pieces of strong evidence we $1370 has a high likely hood of being reached. We wouldn't be against that.
We're observing the quality of this current rally happening on the near term time frame. It's a very impressive bullish engulfing bar for sure. This bullish engulfing bar is a strong reversal for sure on this near term time frame and we can easily get BTC back up to around the $2350 area.
Just remember, so far every rally has given it all back. That will inevitably change. But we don't yet have evidence to suggest that this rally is any different from the prior bull rallies that have occurred along this bigger downtrend. And we don't yet have a clear cut reversal pattern on the intermediate term time frame. We just have a reversal on the near term.
We can afford to be more loose with an entry when we get to record extreme depression levels like Bitcoin $1370 or BTC $1000...we would care a little less about a bottoming pattern first taking place...why? Because if our ultimate downside target was hit then the value proposition would largely shift to upside risk instead of downside risk.
We're not going to be greedy if we see BTC at 1300 and wait for more downside for a long entry is my point. $1300 would have fulfilled a lot of our concerns.
•78% fib retracement
•measured move downside target fulfilled
• past pivot high of March 2017 has been reached
I want to clarify that our bravado meter here is very low. We run a membership subscription based service. So the last thing we want to do is stress Members out by issuing a lazy buy alert because of all the bullish news in the blogosphere and take Members along for "gut gambles"
Like it's all together possible that the August 1st fork anxiety that took BTC down to $1835 could have already been a gross over reaction and that low was it. But the evidence we laid out is still solid and needs to be considered. Therefore we cant advise a long here just yet. Thats the objective evidence still.
We have a strong track record of getting right more often than not. However we're certainly not going to get it right all the time. And we may miss part of the move higher at times. And we're absolutely fine with that. I assure you our stance will change when the momentum and breakout are undeniably to the upside and we get our criteria for defining "uptrend confirmed." In the meantime WE TRADE WHATS RIGHT IN FRONT OF US. That is the most important thing in technical analysis. When and if the setup changes, so will our stance.
Bitcoin right now on the nearterm time frame has an upside target around $2350. From there we can expect that's where much of this near term momentum will fizzle out. There's a heavy battle ground up there of excess supply. If the buyers can take it out, on heavy volume...that will be something to consider if we can see a confluence of bullish momentum confer with one another...then that cultivate a new setup for us to take advantage of. For now, we're sitting tight in Fiat.