While the price action yesterday may have been a wild ride for some, the move was predictable for those that believe the charts and not the hype. So what occurred yesterday? How did I predict the afternoon sell off? It’s really not magic, and the information you need to appear as though you have sage like wisdom is in the charts and based on history; that history being the predictable nature of the human greed and fear cycle.
In this last accelerated run up from $5500 (11/10) and climaxing at $11,800 (12/3) volume began to wane considerably as the numbers got higher and higher. People, especially late comers that were lured in by talk of riches over Thanksgiving dinner began to get increasingly uncomfortable once price action at the top slowed and the extreme volatility that is cryptocurrency reared its ugly head. As a result they found themselves poised, finger on the sell button ready to bail at a moment’s notice.
In looking at the charts (volume especially), you see the smarter larger money sitting on the sidelines, only pushing in with large buys as needed to suck in smaller investors. After which you see stagnant periods of no price action, anemic volume and a well timed big money sells to ignite volatility by indecisive traders not comfortable with their position and poised to sell.
A perfect example being the sudden jump from $11,200 to $11,800 in a time frame of about 45 minutes, where the price hovered on waning volume for roughly six hours. It was summarily erased by a single big money sell and ensuing panic created by the FOMO and late to the table crowd that in 15 minutes plunged the price to $10,100 on Bitfinex. While the price did recover, that should be a clear indication that the market lacks faith at current prices for the order book to be gutted so quickly from lack of support. Ask yourself, do you feel comfortable when you are buy into a trade at these higher price levels or are you poised on the edge of your seat looking to get out if things turn south? If it’s the latter you bought in to damn high.
In the comments section of an article I wrote yesterday another user was telling me purchase price did not matter; it’s going up anyway. It is this type of blind faith that will get so many people hurt in the long run and hurt badly. If things go south they will ride a sinking ship right down to the bottom of the ocean instead of getting in a raft. Sure BTC may go up, or it may likewise go down. The charts indicate that it will be going down in the ensuing days. Why buy a widget for $10 today if you can buy the same widget for $7.00 tomorrow? Likewise if you own that $10 widget and know you can buy it cheaper tomorrow, why not sell it to a sucker that is willing to pay today’s price for it? I have no emotional connection to Bitcoin or any other cryptocurrency, it is but a means to an end. That said I likewise have no aversion to locking in profits by actually converting paper gains into real spendable FIAT that serves to increase my buying power at a later point and proportionately the percentage gain I can expect on my overall net worth. Don’t put blinders on, don’t buy the hype and do what the charts tell you to do.
So what will likely happen today? We will have some sideways price action and run up to $11,500 or $11,600 where it will most likely meet resistance as sell orders from traders looking to get out begin entering the market. From here expect a good drop to around $11,000 and back up again, bouncing in a tight range like a plane with one engine out struggling to gain altitude. At a point late this evening or in the upcoming day or so expect some solid volatility as the other engine begins to struggle and it loses altitude. I cannot accurately predict the exact when, but only the result which will likely be what I described yesterday.
“We have yet to have a real correction according to the one and three day charts; they don’t lie. Volume is drying up and a notable faith testing shakeout is once again around the corner. Applying Fibonacci retracements to the 12 hour time frames on BTC starting at the $8800 low of the last dip (11/30/17) and moving to the current high of $11,900; we could see a pullback into $10,400 levels if bullish mentality holds. This is commensurate with the low closing price of $9600 (11/29); it being a 50 percent retracement of the run from $7900 (11/23) to $11,400 (11/29). Applying a 50% retracement to the 3 day chart starting at the $5400 low of 11/10 gets us to $8637.”
In looking at the charts I see the growth up until September as healthy, but accelerated and much of what followed from $4000 to nearly $12,000 as somewhat unhealthy and unsustainable without a major market correction.
12 Hour
A brief look at the charts, the 12 hour is trending down on the MACD, although we are not overbought; likewise there is little in way of price divergence showing that there is an uneasy calm right now. That; however, is not Bitcoins style and divergence rarely stays in balance after having been so far out of balance to the upside just a short while ago. Prediction sideways action, maybe an attempted rally followed by waning volume and ensuing drop of 10 percent or more.
3 Day
Both the 1 and 3 day charts show us overbought to the extreme with upwards price action beginning to cool down on serious positive price divergence meaning it must come down to once again find balance. When that happens see above as I will look to moving averages for support.
My predictions on Etherium and Litecoin remain basically unchanged.
ETH @ $459
Etherium is going to trend with the market. Let’s face it ETH offers so much promise as a technology. I feel in the longer term it is underpriced and may hit $1000 at some point. Hell I view it as much more valuable than DASH and it’s in the $600 range I think. I would also look at NEO (the alleged ETC of China) that has Microsoft backing it in the future. ETH may find itself giving up some value if it loses Asian Market share to NEO, but even in that event its value will still far exceed its current price. If you are a HODLER, the ETH may be for you when the right buying opportunity presents itself. I would look to adopt a HODLER mentality after the next week over week correction. I certainly see us revisiting and testing the $400 or below zone when Bitcoin enters its week over week correction. If you want to trade ETH today, watch BTC on the 30 minute and hourly charts what it does ETH will follow.
LITECOIN @ $97
Still not feeling the value here; I picked up a bunch in the $40, $50 range and summarily sold out in the $90’s; picked up again in the $78 range and sold throughout the $80’s. This is the first time that Litecoin has been able to sustain near $100 levels; it won’t be the last. We will be revisiting the $80’s and below at some point to really solidify its value at these higher price levels. As is the case with Etherium trade with BTC as LiteCoin will follow big brothers price action throughout the day. I have some seriously out of money buys in the 80’s down to the 70’s right now and will adjust as needed. I may get in the market today or may not. If I do it will only be to try and snipe quick gains on shorter time frames.
While my views seem BEARISH, I am also keeping a close eye on the BTC futures trading that is just around the corner that may bring with it further unreasonable price action to the upside. If that is the case then what we are experiencing may be attempt by big money to shake out some some investors to buy their coins at a lower price in anticipation of a huge bump when the futures trading begins. To that end, in crypto, the expected result is not always the result you get. I will let volume and support levels tell me what decisions need to be made in that event.
Prior Days Analysis:
@pawsdog/12-3-2017-the-market-view-and-trading-outlook
@pawsdog/12-2-2017-the-market-view-and-trading-outlook
