The Bitcoin Crypto-Coaster Ride – Technical Analysis

There will be no financial press, fundamentals, cryptophant community opinions, or geopolitical fodder provided here today, but only basic technical analysis. Why now? It appears that Bitcoin may be in the process of building another base consolidation like it did throughout 2015. Whether or not $6k is the “bottom” is a good question. The answer is that we will know if it goes there.

On the morning of Nov. 2nd, 2015, I published a Bitcoin weekly chart utilizing a data feed originating from Bitfinex. At that time, Bitfinex had the highest trading volume of all crypto platforms. After a base consolidation period from Jan.- Oct. 2015, which followed a one-year bear market off the Nov. 2013 high of $1,163, the price breached the lateral resistance line drawn from the highs of the 10-month consolidation. It was trading at $338 that morning, with the first Fibonacci retrace level of 23.6% at $354 only a stone’s throw away. The rising volume pattern was obvious, and a trendline drawn down from the $1,163 high was definitely history for a few weeks. The basic ingredients were present for a sustainable breakout, without the need to consider a more complex analysis with moving averages or other studies.

To view a larger version of any chart, right-click on it and choose your “view image” option.

“For the Bitcoin fans, the beginning of a breakout, weekly chart this morning w/ Fibonacci & trendline” – @TraderStef, 11:38 AM – Nov. 2nd, 2015

The next day, I posted a follow-up weekly chart for another platform confirmation by using Bitstamp data. The price tapped the 23.6% Fibonacci level, and it looked clear that due to the massive buying volume and a rising price, a decent move was in the making.

“More Bitcoin fans, beginning of a breakout, Weekly chart this morning w/Fibonacci & Trendline, 390’s – @TraderStef, 8:28 AM – Nov. 3rd, 2015

On Nov. 3rd, the first Fibonacci retrace level was decisively breached on the Bitfinex data feed, with the price swimming in the $470s and no resistance until $700. At that point, we had a wild pony out of the stables, with the massive rising volume block as a solid base and a decent shot of retesting the $1,163 all-time high.

“Bitcoin Weekly chart this morning, looking like a RYPO move on the Daily today, 470’s this morning, China baby” – @TraderStef, 6:09 AM – Nov. 4th, 2015

Fifty charts and two years later, referencing multiple timeframes and a plethora of patterns and studies, including a parabolic run with a ton of surprises to the downside and upside along the way, and the launch of $BTC derivative futures at the CME, Bitcoin arrived at its all-time high of $19,891 on the Bitfinex platform on Dec. 16th, 2017. As the cartel and exchanges got involved, all were warned.

“Bitcoin hits bigger stage as exchange giant CME launches futures – Margin Requirement at CME is 35%, while at CBOE it is 40%, reflecting bitcoin’s volatility… dangers of investing in an immature, opaque and largely unregulated market” – Reuters via @TraderStef 8:06 PM – Dec. 17th, 2017

“Warned on Dec. 19 chart post regarding the Dec 18 Hanging Man Doji. They are never good news. CBOE CME seasoned professionals achieving their objective, otherwise Big Brother would have had to shut crypto down with a big stick.” – @TraderStef, 7:45 AM – Dec. 22nd, 2017

“At some point, you get to this fork in the road with derivatives trading involved, and we are there…. RT @TripleDTrader Technicals are pretty much the ONLY thing that matters in bitcoin. Impossible to value it fundamentally.” – @TraderStef, 10:20 AM – Feb. 1st, 2018

Since the 2017 high printed, the chart has been very clear that a bear market is in play, and a 70% correction occurred within two short months to boot. You cannot argue with the numbers, but some well-intentioned folks think that crypto and technical analysis are like oil and water and do not mix. Please enlighten me, because 2+2 still equals 4 the last time I checked. There have been prognostications during this bear phase occurring at every bump and dead cat bounce, with bottom callers pitching dreams of $28,000 or $100,000 or $1,000,000 just around the corner. Bottom callers are multiplying like cockroaches.

IMHO, if folks dedicated to the cryptocurrency phenomena truly believe in the potential high-end price projections, why not wait for a technically sound higher number with a low-risk, high-reward entry point before bull horning BTFD or holding since the high, potentially ruining the finances of folks who know no better? There will always be another bus, so just be patient for the right one and be aware of the regulation landslide that is occurring across the globe. The taxman has arrived with a big stick, as nothing is free in life, except for true love.

We were here on Apr. 20th

Weekly chart as May 23rd, 2018, 8pm EDT close…

The possibility exists for a bearish Busted Symmetrical Triangle that would rule out any $6k double or Triple Bottom play. The $11,800 peak in between the Adam & Eve Double Bottom (see daily chart above) remains a key resistance to conquer if that potential double bottom pattern holds true or morphs into a triple, where a third tap remains on the $6k line and the candlestick does not breach below the 100 Exponential Moving Average (EMA) on the weekly. Also note on the daily chart that today’s low price of $7,260 has fallen back below the 50/200 EMA Death Cross. Price is currently testing support at the 50 EMA on the weekly and approaching the triangle’s lower trendline drawn back to the $6k low. The volume is falling overall with a falling price, but this is a longer-term weekly view and the volumes may only be returning to a lower daily average following the parabolic blow-off and subsequent pullback, so the lowering volumes do not necessarily signify nearing a bottom. The Relative Strength Index (RSI) is still basing on the weekly, with no significant upside indicated. The volume bar on this weekly does not close until Sunday, May 27th, at 8pm, so that volume bar will be much higher than seen today. The bearish pattern that stands out for me is that each rally is halted at a lower Fibonacci level. The chart remains Bearish. If there is a significant bounce off the $6k level and takes out $11,800 like a knife through butter, that would be a Bullish development.

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