Bitcoin: Buying the dip sub $16,000

2021년 6월 23일

Predictions (TLDR the analysis):

• The 400d EMA will eventually fail as support
  
• The 20 Month SMA will be tested and fail as support
  
• The Monthly Keltner Channel will act as support (with wicking very probable) at about 15k
  
• 3-5 year target is 160k with chance of over-performance
  

Main Chart
Bitcoin continues to chop sideways and cause a lot of people a lot of pain through all the uncertainty and difficulty in finding a good trade entry. Big picture I still think BTC is entering a bear market. We may bounce up or down and we could have a head and shoulders here or we could have a double top over there but ultimately the easiest trade understand but perhaps the hardest to do is to buy the bottom of the monthly Keltner channel. The chart covers almost a decade of price action BTC and the pattern so far is very clear, price action runs up parabolically out of the Keltner channel and when it slips the 400 day EMA as support price action proceeds until it the Keltner Channel can act as support. There has been a lot of hope that this will resemble 2013 and there will be a quick consolidation and then a quick pump to the upside and that would mean that the price action should continue to find support here on the 400D EMA. I don't see that happening based on the volatility stop. I will link an idea that predicted the bear market based on the weekly VSTOP and SMA analysis but below we will be addressing the monthly.

Volatility Stop Analysis
There is a very low probability of the 400 maintaining support as the monthly VSTOP and MTF VSTOPx3 are primed bearish. The chart below shows we have broken flipped the monthly VSTOP last period and we are about to flip the MTFx3 after confirming a close below $46.6. The natural conclusion based on history is that the 20 month SMA will fail as support and we test the bottom of the monthly Keltner. Just a reminder that the VSTOP and Keltner are based on the Average true range, a very useful base calculation that I recommend traders at least experiment with.



Below is the BLX chart with the 15 day KC and we first focus on 2011. The data here was to young to have a monthly chart and so that is why we are using a lower timeframe. Once again the KC is found as support on the Keltner channel on the highest timeframe that makes sense, the half month chart. We are also working on closing our third candle body within this 15 day KC and this price action resembles the tops at 2011, 2014, 2018 and 2019. It does not look similar to the top of 2013.


Elliot Wave Analysis
One of the main sticking points for some people is they people don't think that BTC can trade within its previous all time high. That opinion should be to be disregarded because it is is not based on any technical fundamentals whatsoever. The most clear reason why not is in a Elliot wave theory a 12345 wave by default the corrective ABC wave goes within wave 4. Below is a Elliot wave count off of the BLX data that looks heck'n valid. The targets, probably a bout 3-5 years off, is pretty wild as well and will be shown in the fibs section below. Just think 100x is back on the table in 3-5 years. Here is a key point, a ABC correction completes wave 1-2 and sets up wave 3, which by definition cannot be the shortest wave and often is the longest (commodities sometimes wave 5 is the longest).



Here are a series of if then comments. If I am correct then BTC is competing a wave 5 and will see an ABC correction. Very likely to the bottom of the Keltner channel. IF that happens then are set up for wave 3.

Fibs
The most natural fibs we could look for are the 1.618 or 2.618 retracement levels from the top to the bottom of the correction which would put a major stall at either one of those levels, and a potential impulse move between those levels. These are the levels I think most wider time frame traders will be looking at for their long shot. The exact placement of the fibs will require some patience for this move to play out so we know where the exact low will be to do the target setting. This is where I approximate the 160k stall.


Here is another example of why the 1.618 is a very important fib retracement: the last cycle ATH to the low. There are people who are saying that this top was unexpected or perhaps premature. That could not be further from the case. This was a classic 1.618 extension from high to low. Given the power of this chart you should remember it and consider it may remain very predictive in the future.


This last chart is mostly for funsies. It is a fib extension off of the original 1-2 wave and because the way fib levels and waves interrelate somehow it hella call the high here at the 1.272 level. Very curious. We also see the 1 level acted as strong support twice in the 2017-18 bear market. Since this is a longer shot I don't know how to interpret this yet and it is something for me to ponder. We don't know which of these levels may be stiff resistance and which will be support on retracements but his is something to bear in mind. Perhaps the golden pocket will be the next major top in 10 years.


Final Thoughts
If you find someone considering a bear market of less than 70% you have to realize they have no historical basis for that call. The calls of "this time will be different" so far still apply as an error in thinking until we have a bear market that is less than 70%. My long term call, while technically based, still is on the shallow end of btc bear markets. You can consider a bear market by your own criteria but for me now we are out of the early stages of btc lifespan it will be below the VSTOP and MTF VSTOP on the weekly for transition and below the 20w confirms. It will take a lot to surpass that triple resistance. If you see the Monthly VSTOP and MTF and 20 month SMA confirmed bearish then you best consider that we are bearish and consider a dip buying strategy