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Bitcoin: All of twitter suddenly cried out in terror, and was suddenly silenced

This wouldn’t be crypto blogging if I didn’t put in a shameless plug so here it is: If you’ve been reading my articles you probably didn’t get absolutely rekt yesterday afternoon by that hump day dump. The rest of you? Send some more coin to Bitmex and give it another go.

Yesterday at 2:28 PM Central, I tweeted out “Get ready for a blistering 200 point drop $BTC” … and boy was I right. Unfortunately I was right 3-times over, as we saw another two separate 200 point drops afterword as bitcoin cruised past the level of support I had marked as a target. I was away from the computer and couldn’t readjust in real time, but maybe this just gets chalked up as a lesson in rules-based trading and discipline. Either way, great short entry and target, just missed a bulk of the move.

The most important thing to determine is whether this dump was part of a larger move downward or just a one-off event, possibly some coordinated market manipulation. I have long thought that the bottom of this market cycle is still unrecorded and have a “loading zone” of 3200–3700 boxed on my chart. However, there’s still a big case to be made for the 4000–4500 area as well. It really will depend on how much volume accompanies the capitulation event, if it occurs at all.

In the last Technical Analysis article I wrote, I was discussing the importance of the last rally breaking the July’s swing high of 8500 to signal the (potential) end of the bear market. Two high-volume red candles later and we’re looking at another lower high. Not good for the corn.

The next thing we need to do is estimate the support level for the impending swing low. For the bulls, it’s absolutely critical that we avoid a lower low. The chart shows a new trend line emerging with several confirmations — respect the trend and we’re in a symmetrical triangle which could break upwards, break the trend and the bulls must pray for horizontal support before another attempt at breaking resistance.Bitcoin chartFor the bears, a break of sloping support would likely signal an incoming lower low which would make for a great short opportunity. If the lower low paints, then I’d say we’re headed for the bottom.

Right now there are no apparent divergences and price is hanging out right at support. In my opinion, this is a 50/50 gamble as to a break up or down so I’ll be on the sideline until the direction becomes apparent. Watch 6300 closely on the downside and watch 6550 on the upside in case an inverted Bart Simpson bursts onto the scene.

Good luck and stay safu!

 

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