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Bitcoin, a purely technical view

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I don't trade Cryptos, my bias on them, as posted in the past, is that they are a pure mania (not just a bubble).  I think the technology has merit in the search for non physical cash medium but until it become mainstream (i.e. adopted by sovereign nations and who knows maybe sometime in the future as a global currency - SciFi maybe...).  Thus I think the current crop will die out to be replaced by something more serious.

So much for that, now for a purely technical analysis view of Bitcoin.

The rocket to the top is obvious and in a 1-5 wave pattern with a massive spike and drop.  The journey down was just as dramatic until the market went horizontal in a long term consolidation pattern, which was broken to the downside in November after a few halfhearted attempts to revive the patient...

The recent rally is, technically, at this point, a retrace EWT3-4 of a 5 wave return to the start point and likely oblivion.  The rally is in A-B-C counter trend format and currently failing to break back through the key Resistance zone previously broken to the downside in November last year.  A strong bearish rejection at the resistance zone with A-B-C completion and Neg Mom Div and other oscillators oversold tells the tale for me.  Next stop, a retest of the previous support area and likely lower lows and so on and so on.

Take care...

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Kudos to you for a very detailed analysis, thanks.

I concur that Bitcoin is headed south, purely from the huge divergence on the daily chart.

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Hmm, seems someone thinks my purely technical view on bitcoin is "sad".  I guess whoever it is is either not a fan of technical analysis or wedded to a bitcoin resurgence (bias anyone?).  They didn't say why they thought it was sad so hard to know but anyway who care.  I wonder whether the same person will acknowledge their error if Bitcoin does collapse?  I doubt it...  While it is great to get some positive responses like @Bean supplied I would be very happy to hear opposing view, so long as this is based on an alternative view point and not just an diatribe against technical analysis, I mean what it the point in that..?   For me this is a purely  academic discussion as I do not, and never will, trade Cryptos, more than enough other opportunities in more stable markets out there for me.

Anyway the other reason for posting was as an alternative to the buy buy buy bias elsewhere.  Up to the reader to decide which way they wanna go, although forum discussion is beneficial so why not post your opinions?

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On a brief break from bank holiday family fun and just thought I would stir the pot with an updated Bitcoin post to punctuate the gowning hysteria (or I should say regrowing).  From a purely technical perspective, with no skin in the game and only 1 bias, that cryptos are a mania and will end as all mania's do, I see a significant inflection point coming up that may end the current bout of euphoria, just as pundits are making cases for bitcoin to regain old heights and go beyond.

I see a classic retrace move with NMD building and the Fib 38% resistance lies ahead.  Might even make 50% who knows?  All to risky for my blood, more stable markets with great pointage about for me.

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Posted (edited)

Whilst interesting, I’m curious if you’ve ever posted a trade direction which is anything other than short...?

i guess the challenge would be do you have any tech analysis which is bullish ?

Edited by PandaFace

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So looks to me like Bitcoin might have hit a wave 4 top.  Very strong wave C of an A-B-C ending in a classic ending diagonal formation (1-5 count within the formation); a Bearish pin bar turn, not far from the Fib 38% off the all time high on NMD with RSI and Stochastic over bough and turning back also.  Add to that a breakout of that ending diagonal formation today, in a fair show of Bearish strength and it all adds up to a significant period of Bearishness at a minimum or a full on final drop.

Remember this is a purely technical analysis without deep fundamentals knowledge and research that others claim.  I have no interest in trading this so no trading bias either.  The only bias I have is that I believe crypto to be a mania that will end in a train wreck.  Although I do believe the developments in the coding underpinning it will leave to something else arising out of the ashes to complete the journey to a cashless society that Governments have been push for some time now.  As is often the case with new technology, the originators and early adopters will not be the ones who benefit.  So I present this as an alternative to the hype.

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The days break continued and turned out to be a strong one, always good to see this after a turn and break of an ending diagonal as it signals a trend change rather than a retrace.  A continuation in the coming days will add to this.

I forgot to mention the price gap in the support zone.  Falls between the Fib 38% and 50%.  In any scenario I would expect this gap to be filled and probably exceeded so perhaps we will not see a pause on this market until 6000 or so?  Fib 50% is one of the most common retrace points, Fib 62% the most common one but I think that a break of the price gap support would be a bad omen for the hype Bulls (you know, the people yapping abut Bitcoin reaching $100,000 on the way up...). 

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UP early this morning because FX is at a tipping point but then I noticed Bitcoin is rapidly approaching a critical juncture based on my analysis.  Remember I don't trade Crypto and know little about it but am Bearish on Crypto as a bias, see my posts on @cryptotrader thread about what moves Bitcoin for details of the basis for that bias if interested.

Any on a purely technical assessment I have the following to offer:

  • The market may have registered either a 1-5 or A-B-C down from the ATHs to December 2019 turn, which was then followed by a breakout of a Triangle formation to set up the current bull run.  The question for me is whether this is a counter trend rally (lash hurrah) or a trend change
  • Price hit the Fib 62%, almost exactly, which when you think about Bitcoin volatility is pretty amazing, and then spiked back down in a strong rejection, very strong when you look at the Daily chart.  The last time the charts show that was at the ATH...
  • There are 4 unclosed gaps below the turn point, that is a lot of pull.  You might expect 1 or maybe 2 breakaway gaps but 4?  Even though 1 was early in the previous rally to ATHs.  I was expecting some gap closure and the first one has just been closed.
  • The Daily chart is very interesting, the move up looks like an A-B-C (pink) to me, although I could probably carve out a 1-3 so the current bearishness could be a wave 4 retrace.
  • There has been 1 retrace rally, which would be a 1-2 of a massive bear move OR an A-B of a retrace to that possible wave 4 and then a final push up.
  • The move up can be described as an expanding Triangle, a signal of over exuberance, as if that were needed on this market.
  • Oscillators were over bought and now heading down, likely they would hit bottom, Stochastic at least, before any next phase rally.

The critical juncture for me is the confluence of a support zone and the lower line of that expanding triangle (8900-9300).  If the market is going to bounce into another final wave 5 rally it must surely do it here?  A drop through this zone brings the lower gaps into play.  If both are closed this thing is surely going down, down down.  Even if we get another rally phase, the fact that it is a wave 5 in all likelihood suggests this will not go too much beyond the previous ATH, or maybe a double top, before there is another retrace of significance.  The technicals at this point do not support the hype.  Price action is all.  Be careful out there in Crypto-land.

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Price stopped short of my lower trend line but does that mean the retrace is over?  It does not necessarily, unless and until we see a break through the June highs.  So far the whole move has an air of a complex retrace, which would indicate that the current rally is a deep wave B rather than a return to the motive wave.  Currently my technical assessment is pointing to the whole retrace being a 3-4 complex retrace, which when completed would set up a final wave 5 rally to end the while rally move.  This could already be in play but currently price is getting stopped at the Fib 76/78% zone, where the previous reaction rally to the fast drop was stopped.

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    • yes they will be on less charts but I understand your point about the size of the moves in ftse, no harm in trialing them though you might find marking out the immediate prior high and low has more relevance.  
    • Yeah, I keep an eye on volume, that's why it's showing at the bottom of my chart However, I haven't been able to discover a strong relation between volume spikes and trend direction. Sometimes I see orders of the magnitude of 10-20k and the chart doesn't do anything special. Other times you see just average volume and the chart does huge turnarounds. For example what happened at 8.30 with that spike down and then going straight back up and making new highs vs previous candle? All happened on low volume
    • @jameswalker1 my recommendation is trade the demo account to get a better understanding of the costs associated. I traded demo for nearly 2 years before placing my first real trade. It will save you in the long run to get a better understanding of the costs involved.
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