BTCUSD Is The Top In Place?

2017년 12월 9일

BTCUSD update: A move off the 17171 all time high to 13010 in two days. 5K move in two days is a demonstration of how much risk is involved when buying into this market at such levels. What is even more amazing is this retrace is within proportion of the current price action. In other words, this market is not bearish YET.

The nearest relevant support measured from the 5400 low is 12751 which is the .382 of the recent bullish structure. The 5K pullback just missed that level by about 400 points and is now showing a long wick on the current candle. This kind of price action is perfect for day trading long and short for those who have access to reasonable spreads and can short. The futures market should provide that flexibility for the rest of us. Is this market finally going to sell off like everyone keeps saying?

The answer is: it is too early to tell. The bearish price action that has appeared may seem dramatic, but it is within the proportion to the way this market is moving and has not even broken the first projected level of 13010. That is why I keep saying this market is for day traders because you take your profit based on targets on smaller time frames.

There are two levels to watch for as the market unfolds. The 13010 for a double bottom reversal which can lead to a long signal, and the 15580 to 16273 area (.618 of recent bearish swing) which can lead to a lower high and signal a sell off that can retest the 13k level or lower. There is no question that the market is generally strong, and that means there is a greater chance that the support level holds while the resistance level breaks.

I am not buying into this market at all. I prefer to wait for the futures to open tomorrow and next week and see how price action is affected before I take any position in this market. I am more interested in trading the futures than I am of the actual coin because of the flexibility. I am still a firm believer that the futures will bring balance to this market rather than dramatic new highs.

As far as shorts go, the current leg is the first sign of weakness. Weakness means there are more sellers than buyers within the current price action and is not to be confused with a trend reversal which takes a lot more time to develop. This is why shorting is more effective on shorter time frame strategies like day trading which are characterized by tighter stops AND targets. The less time you are in this market as a short, the better. If you are looking for shorts, wait for a reversal at the projected resistance level, that is where the reward/risk is the most attractive. And again, if you do not have a well defined plan then you should not trade at all.

A more serious correction can take this market back below the 8ks but there is NO structure in place that implies that YET. Remember TA offers clues in regard to what is likely to happen in the immediate future. The more time that is measured takes away from the reliability of the analysis because anything can happen. A piece of news can come out that takes the market by surprise which a chart cannot foresee. Often the market is in a position that news will push in a particular direction faster, so TA may not offer precision, but at least it provides a way to measure the risk and potential.

In summary, it will be interesting to see how the behavior of this market changes along side of the upcoming futures markets. There are many opinions but no one knows for sure, not even the people who are responsible for creating the futures contracts for the exchanges. This first leg of selling is normal and is still within the recent bullish structure. If this market is going to correct further, it is more likely to begin that process from a lower high, a double top or a double top variation which can start from a slightly higher high. Emotions are running rampant in this market, do not let yours control you, even a simple plan is better than nothing at all.

Questions and comments welcome.