Good evening all…It’s that time again…Breaking down bitcoin.
So…As always, tomorrow you will be receiving the Forex update…but we are going to explore bitcoin and what we can expect moving forward.
Refer to the first image above, which below is attached as the “BTC 8 Hour”
This was from one of our usual Bitcoin updates on the weekend. What’s helpful is you can now look at the chart and determine the points of interest in the chart that we had projected.
This post – https://www.patreon.com/posts/77867879 was bitcoins’ journey before the FOMC…Look at the chart and then pull up FOMC and see how the price behaved.
This practice alone will help you do this for yourself so you can start to “Train” the eye to see the unseen or prepare for the uncertainty.
This post https://www.patreon.com/posts/78238205 is another bitcoin journey for you to explore, again you now have the current price action for you to go back and review.
I am going to do a masterclass session on the “Practise” so you can see how I use the past to “train the eye”.
The next image requires you to think out of the box…Refer to the image “THINK OUT OF THE BOX”
When you look at this picture you say to yourself that the green vectors are going to be recovered so thats all i need to focus on…Correct, but let’s add some weight to that.
Draw your attention to the two pink lines. This is the next zone in the chart where volume in principle has been the most from this current move to the upside.
Now here is the “thinking outside of the box” – Notice that volume in that area. We can agree there is not much there…So why would I believe I would expect the price to bounce from that zone…?
Which takes me to the previous volume zone above. Look towards the Pink arrow above around the 23000 blue lines. Volume is bigger there!
What does that leave me with?
How is it that at the point of the move higher most of the volume is present in that zone and the price has broken down? Surely in that zone, if we go by the principle of “retail buying” at the highest point, that price would have at least continued to move higher?
Well, its all down to the fact that MM was transacting in this zone, selling into traders who are buying. This is why we assume that the next logical point in the chart that will show an interest in traders is at the point in the chart that says “Zoom in” This would take us to the price point of around 17k.
Do you now see how you have now added more weight to the price coming down to recover the green vector candles?
Of course, anything can happen, but we need to try and make our decisions logical, if we cannot assume logic behind a trade, then we will take one emotionally…
The next chart for you to explore is the “BTC SHORTS ZONE”
Now…lets assume you run a short from the current price point.
The purpose of this exercise is to get you aligned with “absorbing risk”
So price is trading below the 50 ema on the 1hr time frame. But the 50 is close to price. It is safe to assume that curing the start of the psy ranges we could anticipate bitcoin to move up to recover at least 50% of the red vector.
Now note: the longer bitcoin stays in the current range the closer the 200 ema will get towards the price. This is important because we have to find a point where MM would likely try and hit liquidation zones when it comes to shorts…
Draw your attention to the zone in the chart “IF MM DESIRES SHORTS”
This is the start of what appears to be the manipulative move by the MM to induce longs but gets his shorts filled…
Now stick with me here…If he wants to move price back up to encourage traders to believe this is the “Dip” then he will start moving price back up and hold above the 800 ema on the 1hr.
If he does that then fast candles may appear but more so you will have ema resistance points. In other words, if he wants to run price lower he will simply break this zone and go lower…We are trying to establish if there is a desire to build more shorts in this zone.
Now back to the idea of running a short position from the current price point. Refer to the “Liq/Stop ABSORB Zone” this in principle would be where you would see a drawdown if you ran a short now. Would that be something you can absorb? What if Bitcoin goes straight back up towards 23k?
Well to answer that question…You need the price to break above the 50 and the 5 and 13 ema to cross over the 50EMA…That simple…You don’t see that, it’s yippee Kiyah to the downside.
But do you see how we apply logic to a trade?
Now let’s apply some Macros to assume that Bitcoin is going to follow the “Narrative”
The Risk on/off chart gives us a good clue as to whether “Wall Street” is feeling optimistic about taking risk…
The current reading shows the Risk ON/OFF reading is at 52.38. A reading above 50 indicates excessive optimism.
Pay close attention to what happens once Risk is aggressively coming off and they cross over the black dashed line (Look back at each time risk crosses over that dashed line)…Look at how price breaks down.
One would assume that if risk is coming off for stocks then naturally we assume the same for bitcoin.
Consider the smart money chart…I have drawn a red line suggesting that if smart money sees cpi readings coming in next week suggesting a drop in inflation, then the market may return back up, so if Smart money is going to take profit on the current retrace lower across the board, then the smart money line chart will point down, take some profit and resume its trend back up suggesting smart money is “buying”
Now…here are some stats on the Hyblock…The 7-day and 12hr charts are not really showing me much action. But this is what the one-month shows:
$18.4 Billion long liquidations @ 20900
$19.3 Billion Long liquidations @ 20800
it grants the question that if the macros above suggest wall street is taking money out of the markets and bitcoin follows suit, the only logical point in the chart is to progressively make its way towards a Phat pool of liquidity and take over $37.7 Billion dollars worth of long liquidations…That’s not including the in-between zones either.
Conclusion:
So it leaves us with the question…Bitcoin to go down? Again, what does bitcoin need to do first to make me believe that it won’t go down? It’s all about attaching logic to what “it will do first” that will help you apply the logic of it going down…
Remember – Trading decisions are to be based on logic…Not emotions.
Lets see what bitcoin brings over the next two days.
Mad Love
T
