The long haul...
First of all: I hope you and your loved ones are ok. I hope you are getting through this and I hope you will find something positive in all of this. This may take a few weeks, but more likely is a few months... I am not an expert though, so you should not get your epidemiology advice from me. So... Let's look at the market, shall we?
Whenever the market is complicated and unpredictable, I like to simplify matters as much as I can. In my opinion the weekly paints a pretty clear picture of what we just experienced. There was a long standing Trading Range (between about 6.3 and 6.8, depending on the exchange) that acted as support on a lot of crucial moments in 2018 (not sure it was quite natural, but that is a discussion for another day), completed failed to act as resistance during the bull run of 2019 (in fact, it was one of the largest green candles of the bull run that broke it) and successfully launched another big bounce just before all hell broke loose again. That is one long sentence to say that this trading range is interesting and that it failed to act as support but now seems to act as resistance. I really have to learn how to get to the point faster. Anyway... Let's zoom in a bit. What about the daily?
First thing you should notice is that Fibs are cool... How about TA not working in a panic, right? Stopped right on the 1.618. Could be a coincidence of course, or TA could actually not be total nonsense. Doesn't mean it was 'expected', just that after the fact you can say 'hey, some algos must have had their targets down there'. They may have switched sides now. No way to tell. It did cause quite a considerable bounce, exactly to the top of the trading range mentioned earlier. The (E)MAs are also interesting. Everyone has their favourites but I tend to stick to the more traditional ones. As you can see on the daily, wicks are often rejected by the 21 and the bodies tend to close on the 13. That doesn't mean price cannot break above (otherwise we would never break a trend) but it does mean that until we open and close a candle above either, we are still trending down, even though we bounced ±3000 USD (or 80%) since the bottom. Congrats to the brave souls that bought there, by the way. Most importantly to me is that we are once again below the 100 MA and not by a little bit. So despite all the optimism I would like to have, I still feel BTC has a lot to prove. We are below the 2018 trading range, below the 21/13 EMA and below the 100MA on the daily. I would have a hard time arguing that this is bullish. However, that doesn't mean I think the end is nigh.... I have no idea what is next because a lot depends on the macro-economic situation and I cannot predict that anymore than you can. I think we are in for a more long term correction across all markets. The following chart that I shared last time still feels most likely to me.
And I think that is a very bullish chart, to be honest. Now, can we bounce out of here in a hurry instead? Well, sure. The current monthly looks quite positive in fact, with long wick down, suggesting demand below 5.5K is a lot stronger than supply. In Wyckoffian terms this could have been a spring. There is some elegance to that view as well.
If it wasn't for that pesky monthly 9 MA (and the current macro economic factors), I would possibly be quite bullish. However, I think that this demand wasn't coming from outside the ecosystem, but I think it was artificial support, much like the 2018 6K floor was. I think, I don't know. Any trading tips then? Not really. That is not what this blog is about. I would be extremely careful because it can go either way and quite explosive as well. Between writing and posting, the situation can have changed again dramatically. As I said last time, if you're an experienced day trader, this is the most lucrative market there is. If you're a good one of course. For investors I am not sure this is the right time yet. The bottom may be in, but we can also see a true test of crypto as a system in the next 12 months. Fun times! As always: trade safe, be safe, wash your hands and don't think you're invincible because you're young. That goes for the coronavirus too. Not just trading.
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