BTC short re-visited

in #bitcoin6 years ago

It is Wednesday m'dudes.

I'm currently transferring my bitcoin node over to a different computer and am reminded of how much data is contained in the bitcoin blockchain. I started syncing before the England/Croatia match a few hours ago (more crypto twitter salt incoming) and have barely made a dent. Almost a full decade of immutable, uncensorable, irreversible, and trustless value transactions! I feel a bit naked with my node out of commission, but maintenance is a part of life and sometimes you have to bite the bullet.

Let's dive into some technicals.

Shorting the bearish divergence yesterday turned out to be a good move, and depending on how ballsy you were on the entry, you could be looking at 6-7% gain with no leverage. Feels funny bragging about those numbers in crypto... but hey, here we are. It's chop, make money. I waited for a confirmation, which turned out to be a huge red candle eating into my entry, so I've been hovering around even. Now the question is, did we get it right?

Initially, as I opened my position, the corn dropped around 100 USD down to 6260 or so and I thought I nailed it, almost closed the position. But we're not here for mini-moves, so I kept it open. The massive bear div on the daily indicated potential for a much bigger multi-week move, and I tend not to be much of an intra-day trader. For reference, the prior two bearish divergences were followed by a 33-day and 50-day price decline, respectively. This, in combination with market sentiment, is reinforcing my resolve to keep this position open rather than close it out for minimal gain on the next mini-swing low.

2018-07-11 455pm BTC bear div.png

On the other hand, zooming into the hourly chart, the 6290 level of support has been defended four separate times since yesterday afternoon. Keep in mind that this has been on relatively low volume, but the candle formations are classic long-wick indicators of zone support. Above this area of consolidation is a level of resistance that has knocked price down four separate times around the area of 4208. Price discovery in this zone has been volatile so it's been feast or famine on the shorter time-frame charts.

2018-07-11 514pm BTC hourly support.png

One thing to watch out for is the completion of an inverse head and shoulders pattern on the daily which would suggest a trend reversal. And an iH&S of this size could mean "the" trend reversal. You could see the potential for this to develop even several days ago when the swing-high was put in for our bearish divergence, but it certainly looks as though it's a growing possibility. I'm going to trust the larger time-frame confirmed divergence rather than an unconfirmed potential chart pattern, but it's something to keep an eye on. Remember that despite what the hot-shots will have you think, there's no real right or wrong - there's continual adjustment as risk-reward moves either for you or against you. I will be tightening my stops as time goes on.

2018-07-11 442pm BTC.png

Time will tell which way we're headed, but one thing is for sure: if we break down out of the 6290 area, we could have a ways to go. For fun, see below for how important the 6290 and 6408 support/resistance lines are. These were the bounds of consolidation on the way up, and now they're acting as the bounds of consolidation (potentially) on the way down. Now pop on your fib retracement, and voila, a nearly perfect match with the 382 and 50 levels. Cool! Don't be afraid to use that 618 level as a target to cover your short.

2018-07-11 521pm BTC fib levels.png

Cheers and stay safe!

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