BTCUSD Perspective And Levels: Looks Like 8Ks before 12Ks?

1 thg 12, 2017

BTCUSD update: After making the all time high of 11441, the rug gets pulled and now that this market has attempted to reestablish some stability, it is possible to get a better idea of where price is likely to go next.

The outside bar that was painted 3 candles ago (11441 to 9000) is a sign of a top, at least a temporary one. For those who were shorting too early, THIS is an example of what should be in place BEFORE you even think about shorting this market. I also wrote about the symmetrical nature of the zig zag that produced an extension at the 10650 area which was not exact, but as you can see, was within the ball park of the peak. This why I kept repeating, lock in profit while you CAN, not when you have to.

This dramatic price action has generated new levels to be aware of and has signaled a change in momentum to bearish. Measuring from the 5400 low, the nearest relevant support is the 9120 area which is now showing signs of a double bottom. Below that, there is the 7650 to 6690 area which is relative to the .618 area. The new resistance zone to watch for a retest is now the 10450 to 10870 area which is relevant to the .618 of the new bearish swing.

This kind of price action is where people buy too early and think they just got a good price before the next run to 12k. Based on the current structure, this market is more likely to test the low 8ks or high 7900s before finding any significant stability. Even though there is a double bottom in the low 9ks to 8800 area, it carries much less weight in this bearish context. And relative to the big picture, the low 9ks is an extremely shallow support.

The level to now watch for is a failed high within the 10450 to 10870 area. That is the place to experiment with shorts, NOT when this market is making new highs. Price actually tested this area very briefly and rejected it which also adds weight. Typically corrective moves unfold in 3 waves, (a zig zag formation) and at the moment, is possibly setting up for the next leg lower. I cannot short these markets even if I wanted to because I am not treading on margin. I have no problem waiting for a much lower price to buy into after stability reappears.

I am writing about this bearish scenario because these are the signs that the market is showing based on structure and price action, and is NOT based on my feelings, opinion or anything else. I am flexible and have the ability to adjust to new information. Which means IF the market happens to break above the 10870 area with conviction, then that will negate this bearish scenario that I am writing about now. As long as it stays below 10450, the bearish scenario is likely to persist. That is what markets do, and it is our job as short term traders to go with the flow, not assert our meaningless opinions to validate our egos.

In summary, I have NO intention of getting involved in this market until I see levels and price structure that are in line with my swing trade plan. Since I can't and do not short these markets, I have no choice but to stay out and observe. A break below the 8800 area will signal the next bearish leg is in play and can take this market back to the low 8ks. Do not get fooled by the initial leg of a likely broader sell off. Pay attention to the technical signals, not the news which can easily mislead the less experienced into thinking this is a buying opportunity. This market has gone too far too fast which is extremely abnormal (look at a weekly chart), and the corrective move that is attempting to unfold is actually very healthy and required before this market can continue higher. I do not know how low this market will go, but I do know that it is too early to view the current retrace as a buying opportunity. Be patient, make your plan and let the market come to you.

Comments and questions welcome. (I appreciate the community members helping to answer questions here, again if it is a pressing question, PM will get you a faster response).