At 09h00 UTC, today, the bulls stampeded bitcoin price through the resistance ceiling. The move was relentless and pushed price $20 higher in some exchanges. Recent price action had most traders (correctly) positioned short prior to the catastrophic spike. The analysis below may put some…
At 09h00 UTC, today, the bulls stampeded bitcoin price through the resistance ceiling. The move was relentless and pushed price $20 higher in some exchanges. Recent price action had most traders (correctly) positioned short prior to the catastrophic spike. The analysis below may put some joy inside your tears.
Time of analysis: 15h14 UTC
From the analysis pages of xbt.social, earlier today:
Not only was today’s move unexpected – and unannounced by any indication in the chart – but it left most traders unprotected to the upside as continuing decline seemed more and more certain. This morning’s analysis [at xbt.social] showed the potential for a wave to the upside, but even that did not make provision for a third of the spike that sprawled across the bitcoin exchange charts.
The accusation that the move was the result of coordinated manipulation can be made, but it does not help our analysis or our trading. The trader must deal with all eventualities in the chart and get back on the horse each time. The xbt.social dynamic stop loss would have minimized your loss in today’s mass liquidation, otherwise forced closure was the unavoidable outcome for most margin trades. A few sell trades, opened on the xbt.social trade recommendation at the last high have survived.
What to do with these open trades? Hold short, and here’s why:
Price had turned on a dime at the red Fib line overhead. Not shown, the last time price had touched this line was at the previous corrective high at the end of July. The Fib line fan originates at the previous high made in mid-July.
Notice that the wave up does not have an impulse base-building phase. The structure just prior to the spike up slopes downward and makes lower lows all along. This means that the wave up is still not part of a new advance but a correction that should soon return to decline!
Anyone not actively in a sell trade would be best off to remain out of the market at this time. Wait for price action in today’s most exuberant advancers, namely OKCoin, BTC-China and Huobi, to decline back below their 1-hour 200-period moving average. Doing so will confirm a return to decline and that will be the appropriate moment to position short again.
Now is no time to think of what you do not have. Think of what you can do with what there is. – Ernest Hemingway (The Old Mand and the Sea)
An unfortunate outcome today, but it is a manifestation of the same characteristic that makes bitcoin price rallies haul spectacular distances. Traders have no choice but to take these losses in their stride. The move serves as a reminder that we should protect our speculative backsides at all times. Until confirmation to the contrary becomes evident, both technically and fundamentally, the trend remains down.
Bitfinex orderbook depth and Buy/Sell Volume:
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Last modified: January 25, 2020 11:07 PM UTC