[Daily Discussion] Saturday, February 22, 2020 Bitcoin Markets |
- [Daily Discussion] Saturday, February 22, 2020
- [Altcoin Discussion] Saturday, February 22, 2020
- Bitcoin: A Story in Price Action + My analysis
[Daily Discussion] Saturday, February 22, 2020 Posted: 21 Feb 2020 08:05 PM PST Thread topics include, but are not limited to:
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[Altcoin Discussion] Saturday, February 22, 2020 Posted: 21 Feb 2020 08:05 PM PST Thread topics include, but are not limited to:
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Bitcoin: A Story in Price Action + My analysis Posted: 22 Feb 2020 10:59 AM PST Before we get started, understand a few things: The ones who determine where trends begin and end are the traders with the deepest pockets. This isn't a secret cabal that meets up and decides their next move. They are wealthy individuals (or entities) who are all looking at the same charts that you and I are. They are just wealthy traders, and their positions are so large that they must trade on longer timeframes in order to make money in this market. Their accumulation and distribution takes weeks and/or months. While buying and selling for us is an easy task, for them, it's a strategic campaign. They can't just market buy their entire position like we can. Markets are in constant search of liquidity. The price will continue to rise until it finds enough supply that demand is completely filled. Eventually the market becomes oversaturated with supply, and this leads to a decrease in price as supply looks for demand. This process occurs on every timeframe. Now let's interpret bitcoin's price action. You can follow along with this chart: https://www.tradingview.com/x/lp3YiHAO/ Looking back, we see that November 2018 to March 2019 was accumulation. In April 2019, accumulation was over and the mark-up began. Famous trader Mark Minervini talks about looking for stocks that have "institutional sponsorship". Stocks that are being accumulated by institutions and get a large "push" (buy) to get the move going when they are done. This is pure conjecture, but the April 2nd "push" may have been sponsorship by a wealthy trader/entity. Regardless, what actually matters is that joe public was on board to continue the move higher. If we weren't, the sponsorship would have failed, and price would have dropped back into the accumulation range. The mark-up phase begins. Demand meets the 1st round of supply in the 5k range. Smaller traders take profit (I did, unfortunately). The big guys aren't interested in this area. They didn't accumulate for 5 months just to sell here. They plan on selling much higher. In May, demand increases and price marks-up higher in search of supply. Demand meets the 2nd round of supply in the 7-9k range. A few weeks of distribution to buyers, and demand is still not satisfied. The market wants more bitcoin. In June, price marks-up even higher in search of supply. Demand meets the 3rd round of supply in the 10-14k range. The biggest traders begin unwinding their positions in this range. Like accumulation, distribution will take them weeks/months. They don't care about selling at the exact 13.8k top. There isn't enough demand up there. Large traders don't sell where they want to. They sell where they can - where buyers will show-up and support their distribution. This is the 9.5-11.5k range I've highlighted in red. Eventually, demand has been completely saturated, and the price breaks down from the distribution range in search of liquidity. Deep pockets begin accumulating again in the 6.5-7.5k range. After a couple months, mark-up begins in January in search of supply once again. Demand meets its 1st round of supply in February. A range is being formed here right now. The question is: will demand in this range be enough to absorb all the supply coming to market, and be enough to search for more at a higher price? My ST analysis: Looking at the dashed line at 9.6k, you can see price is back in the previous distribution range from late 2019. A weekly close below 9.6k will warn us that supply is overpowering demand. Maintaining above 9.6k will add evidence that this prior resistance (distribution) is turning into support (accumulation), and a push to the next resistance at 11.5k is possible. I know what some of you are thinking: "past performance is no guarantee of future results". I 100% agree. But past performance (price action) certainly influences the buy and sell decisions of the deepest pockets in this market. They don't trade off feelings. They trade off hard data. In this next chart, I've added the 21-week SMA. Notice how reliably it determines the general trend. It supported the entire 2016-2017 bull run: https://www.tradingview.com/x/s9KVW2sa/ And it (mostly) provided resistance during our bear market. Notice everything that happened at the red arrow in the chart below. The downtrend line from ATH was broken, price broke above the 21-week SMA, and an ascending triangle chart pattern broke upward. This is called confluence. The more confluence, the stronger and more reliable the signal: https://www.tradingview.com/x/XuFRYhkk/ The 21-week SMA also marked the breakdown of the distribution range in Late September 2019. It then served as resistance on the late October spike up to 10k. The market is currently oscillating above and below it. This is the large consolidation stage before, what I believe to be, the sustained bull run that is coming. Eventually, the 21-week SMA will again serve as major bull market support. My LT analysis: A weekly close below the uptrend line that goes back to November 2015, and longterm bullish market structure has seriously broken down. In that case, I would close my positions and wait for clarification. A weekly close above 11.5k and price would be above the ATH downtrend line and the 11.5k resistance line. Disclaimer: My downtrend line from ATH is not a valid trendline. A trendline is defined as 3 touching points. So this line is more speculative than the uptrend line. But I am including it in my analysis because when it aligns with other important levels (such as 11.5k resistance), confluence exists. And that increases the probability the downtrend line will provide resistance and become a valid trendline. To wrap all of this up, the lines I have on my chart are the ones I believe are most relevant to bitcoin's past and future price action. If you were looking for predictions, sorry, I can't give that to you. But I can do my best to interpret the past and speculate higher probability outcomes based on the market's reaction to those lines. I hope you guys got some value out of this. I'm happy to receive constructive criticism on my analysis - anything that could improve it. Any questions about things that need clarification, ask away and I'll do my best. [link] [comments] |
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