BTCUSD update: Price retests the 13786 to 12853 support zone after failing to push through projected resistance. This is a trading market.
I have written about this since the overdone rally in December: unrealistic markets reinforce bad habits and warped expectations and the results are very apparent if you read some of the negative feedback that I have been getting on various forums. The kind of price action we are seeing at the moment is more in line with how markets generally trade, especially after the dramatic rally this market has seen recently.
The 16350 to 17867 resistance zone is the .618 of the recent bearish structure and I have been writing about its significance for weeks. If you actually read my recent BTC report, I explained how a break of the 16100 level confirms BEARISH momentum. On top of that I have been reiterating locking profits at the highs. If you find yourself unable to comprehend these simple concepts, then you should read more popular reports that tell you exactly what you want to hear.
At the moment, this market is in the midst of support levels while momentum is still bearish. It is also literally in the middle of a broader consolidation defined by the 17200 and 11600 areas. The middle of a range bound market is the probably the worst place to establish a NEW position because price action is the MOST RANDOM. Randomness is what a trading plan aims to minimize.
Since momentum within this range is still bearish, I am anticipating price to retest the low 14Ks (which is a minor .618 support) or possibly a push back toward the 12853 level which is the lower boundary of the .618 support zone that is relevant to the recent bullish structure.
Within these support areas, I am looking for bullish reversals. That means IF a retest and price rejection occurs it will be establishing a higher low or failed low reversal structure. For ME this scenario is what I look for when I am interested in swing trade longs. KEEP IN MIND I do NOT KNOW if these reversal patterns will occur, it is a matter of IF the market chooses that scenario. If the market conforms, then I will be looking to buy into the bullish reversal. If instead the market falls through, then I do nothing.
As far as shorts, for those who have been reading what I write know that I do not short these markets. I will look for those opportunities in the futures once the spreads become more practical for the type of strategy I employ. At the moment I am still carrying a position trade long that I intend to hold with no stop or target. (Read my reports from 10 days ago).
In summary, the whole idea behind projecting support and resistance levels is to have a way to not only anticipate reasonable levels for the market to retest in the near future, but also to have a predefined plan that will govern your decision making process when such levels are reached. The price areas in the low 14Ks and within the 13786 to 12879 area offer reasonable levels to anticipate bullish reversals. This type of price action is in line with buying at range lows but also buying into a much broader higher low that many participants seem to be unaware of. Patterns on charts helps us build a decision making process since they repeat, BUT you also have to look beyond the patterns and consider them in light of the market CONTEXT. If you cannot see beyond the chart, you are much more likely to react along with the herd rather than anticipate it.
I'm sure you've seen the "Lifecycle of a Bubble" chart. For the short term, I'm bearish, but even for the long term I have changed from bullish to neutral on Bitcoin. I would love people's thoughts on this:
Looking at the top 50 coins -
* December 10, BTC had 63% of a $390 mil market, with BTC market cap of $233 mil
* Jan 9, BTC has 37% of a $678 mil market, with BTC market cap of $249 mil
To lose 26% market share in only one month is actually pretty astounding. .... $300 million poured into market in the last month, and BTC is still trading at the SAME PRICE as a month ago.
Now, I can see one of two things happening:
* BTC bulls take over SOON, driving BTC to past the 17k-18k area, causing a bunch of the money in the altcoin market to rotate back to BTC. Let's say this happens and BTC can retake 50% of market share... 50% of $678 mil total market would be a new $339 mil market cap for BTC, an increase of about 50% from current, for a new high of around $22,500. From there, the bulls can keep control and drive it higher.
* BTC bears keep control, and BTC follows additional correction patterns down to 12K, or simply keeps trading in the 12K-16k range for another few weeks. In this scenario, new money will keep coming into the market -- but new money will heavily go into altcoins vs BTC, driving BTC's overall share even lower.... let's say BTC market share can drop to 20% of a $800 mil market (among the top 50 coins). ... This would give BTC a new market cap of only $160 million and a trading price of about $9,600.
NOW, let's say the second option happens... if $650 million is in "coins other than BTC" then BTC will almost definitely lose #1 position to Ethereum, and possibly drop even further down the list of coins to #3, #4, #5...
And, people will realize that even with Bitcoin's incredible year last year, that AMONG THE TOP 40 COINS LAST YEAR, BITCOIN'S RETURNS WERE #21 ON THE LIST!. And, Bitcoin will become like "Myspace vs Facebook" and will cement it's trading along the "new normal" price of about $4,000 (depicted in the "Lifecycle of a Bubble" chart) and slowly rising from there as the overall market grows.
m35m3r
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@chwi03, I think with option 2 you have hit the nail on the head, IMHO we will never see a 20k BTC again, key will be when Bitfinex / Bittrex / Binance re-open the gates & new money flood the market, if that money goes towards Alts, BTC will slowly fade into oblivion...
Beeron
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@m35m3r, I used to think the same as you until I talked to more seasoned traders and realized that big money takes their alt coin profits and puts it into Bitcoin until they are ready to take a position in another alt. At the very least, whales need BTC to take big positions in alts because all of the coin pairs are with BTC. Bittrext, Bitfinex and Binance traders need BTC to buy alts. BTC isn't going anywhere unless a new trading pair, say LTC/alts is common - which wouldn't be bad imo. But until then, BTC is going up. If money enters the market, BTC will sustain.
In fact, imo that same concept is exactly what is sustaining LTC from a different angle right now. People don't want to pay BTC fees so they buy LTC, send LTC to the exchanges, buy BTC with the LTC, and then buy alts with the BTC. LTC and BTC both play pivotal roles in sustaining alts imo. If more ETH pairs show up, that could change, but not until then. There's no other way to buy alts right now.
Cryptomerchant
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@chwi03, as much as I think btc is obsolete indeed, bigger part of crypto investors do not know altcoins, they were attracted by bitcoin on the news. In technology business this time everything becomes obsolete super fast. And tend to be replaced. But in this case the majority of altcoins are paired with btc, a Downfall like that would bring everything down with rare exceptions as we see now. Ethereum has its own markets and is paired with usdt also.
muzammil99
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Here is my view
JaguatXJ
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Thanks, very instructive !
What are the signals to look for in the low 14Ks to anticipate the bullish reversal or confirm a push back toward the 12853 ?
Looking at the top 50 coins -
* December 10, BTC had 63% of a $390 mil market, with BTC market cap of $233 mil
* Jan 9, BTC has 37% of a $678 mil market, with BTC market cap of $249 mil
To lose 26% market share in only one month is actually pretty astounding. .... $300 million poured into market in the last month, and BTC is still trading at the SAME PRICE as a month ago.
Now, I can see one of two things happening:
* BTC bulls take over SOON, driving BTC to past the 17k-18k area, causing a bunch of the money in the altcoin market to rotate back to BTC. Let's say this happens and BTC can retake 50% of market share... 50% of $678 mil total market would be a new $339 mil market cap for BTC, an increase of about 50% from current, for a new high of around $22,500. From there, the bulls can keep control and drive it higher.
* BTC bears keep control, and BTC follows additional correction patterns down to 12K, or simply keeps trading in the 12K-16k range for another few weeks. In this scenario, new money will keep coming into the market -- but new money will heavily go into altcoins vs BTC, driving BTC's overall share even lower.... let's say BTC market share can drop to 20% of a $800 mil market (among the top 50 coins). ... This would give BTC a new market cap of only $160 million and a trading price of about $9,600.
NOW, let's say the second option happens... if $650 million is in "coins other than BTC" then BTC will almost definitely lose #1 position to Ethereum, and possibly drop even further down the list of coins to #3, #4, #5...
And, people will realize that even with Bitcoin's incredible year last year, that AMONG THE TOP 40 COINS LAST YEAR, BITCOIN'S RETURNS WERE #21 ON THE LIST!. And, Bitcoin will become like "Myspace vs Facebook" and will cement it's trading along the "new normal" price of about $4,000 (depicted in the "Lifecycle of a Bubble" chart) and slowly rising from there as the overall market grows.