1/16/2017 The Market View and Trading Outlook

And 46% of the time symmetrical triangles break downwards. That said, we are not totally in shitsville at the moment, but we are rapidly heading that way as bullish options are beginning to run out. The only bullish scenario still in the cards is a false break and reversal to the upside, but we are going to need some confirmation first. As I trade and don’t HODL I will continue playing the smaller time frames for profit regardless of which direction it decides to go.

Let us set emotions to the side and look objectively at this thing and figure out a strategy that 1) protects our capital 2) exposes profit making opportunities and 3) does not lose sight of all possible options and historical outcomes for this pattern.

In order to remain emotionless and objective we need to examine the data and start asking ourselves simple questions based on nothing more than that.

Did we break below the lower boundary of the symmetrical triangle? Yes

Did we break below the lower boundary of the symmetrical triangle on higher than average volume? Yes and No, as it depends upon what time frame you are utilizing to make that decision. Any frames below and including the 12 hour, yes volume was above average to the downside. However, for the 1d, 3d, and 1 Week volume is not as of yet impressive or indicative of a massive crash. That could change if selling pressure continues.

What information can be gathered from the MACD and RSI? On the 1 day, the RSI has us very oversold, nearly historically oversold as this is the longest we have remained in oversold territory since Oct 2016. Which means that it is going to take considerable selling pressure on tremendous volume to keep pushing us lower. Also and as bad as things look for the moment, we are actually still above the MACD 0 line on the daily chart and it will serve as support. Also the MACD histogram shows that while we did break below the lower boundary of the symmetrical triangle “so far” the momentum of this sell off is considerably less than the selloff of December 21st. The histogram had us at a -660 then and we are at -329 now which is indicative of seller exhaustion. Volume between the two time periods is also vastly different, the selloff of Dec 21st saw 178.5k, we are currently at 70k so no matter how you slice it there are still far fewer sellers at current.

Can this change? Of course if price slowly declines to anything below $10,000 I would expect a pretty substantial panic sell off at that point.

What may of happened last night? As I am a conspiracy theorist and still saw large buy order being filled it may be whales or institutions stop hunting as I am sure there were a considerable amount of stop loss orders in the $12,800 range or lower that triggered as price declined.

What is stop hunting? A strategy that attempts to force some market participants out of their positions by driving the price of an asset to a level where many individuals have chosen to set their stop-loss orders.

Source: https://www.moneyshow.com/articles/currency-29951/

Why? It allows those with very deep pockets to fill very large orders without slippage. Ie. If a whale were to market buy 1000 BTC, he is going to drive the price way up very quickly on himself. But if he set a buy order for 1000 BTC say 13 percent below market price or 5% lower than the majority of the stop loss orders and started selling 250 BTC chunks until he triggered stops and forced other traders out. The ensuing cascade of sells as stop losses triggered would sell right into the waiting buy order allowing it to fill at a set price with no slippage.

Does this pattern always end bad on a break down through the bottom? No, but more often than not it does as it more often double busts than it does reverse and go upwards.

Taking all the above into account, it’s a play it carefully scenario buy lightly on dips and be ready to abandon ship on higher than average volume to the downside or busted trend lines.

So let us look at the charts and see what if any information we can find to make a prediction.

On the 12 hour we broke below the lower support boundary of the symmetrical triangle on higher than average volume. That said volume is still significantly lower than the selloff that occurred on the 21st of December. The RSI has us very oversold for the moment though we are still trending down and may ride the bottom as price continues to decrease. On the MACD we are nearing a momentum high to the downside which could be indicative of another strong selling sell off in the works. We had -273 on January 10th and are at -253 now, so long as we do not go below -273 this period should come to an end and give some limited upside buying potential. If volume increases and it breaks -273 the next slide could be even more dramatic and indicative of a double bust post triangle lower support breach. The long and short of it is there is nothing in this timeframe telling me to buy. Scarily we are well below the longer term 77 period moving average and in potential free fall territory to a support level on a larger time frame. The 1 day 77 is $12,200 so it has been breached, but is attempting to fight back. If it fails the next line of support is the weekly 21 period moving average at $8600, followed by the 3 day 77 at $6500.

This is what we are hoping for in the 12. Will it happen? No idea as of yet, but it is yet another variation of outcome for a symmetrical triangle

The 6 hour is not showing me a lot of love either, the vast majority of indicators are to the sell side. Thus far the only positive takeaway is that the break below the triangle support level was according to the MACD histogram not as enthusiastic in terms of momentum as it was on the crash of December 21st. On December 21st MACD signal line divergence was -224, as of yet we have only hit -204; a break below -224 would be back and indicative of double bust as momentum to the downside is increasing. Volume was higher on this most recent breakdown, but some of that is obviously buying volume as well from those that tried to put up the good fight at the $13,000 mark. It is for this reason that MACD/Signal line divergence is less this time than the breakdown of December 21st where the vast majority of volume was sellers only. Regardless nothing to see here save we know there are still (at least for the moment) some buyers in the mix and all hope has not yet been lost.

The 4 hour is essentially the same story as the 6 hour, price breached the lower boundary of the triangle on higher than average volume though there are buyers in the mix still putting up a fight. The MACD histogram has a current low of -203 compared to the -258 on December 21 indicative of less selling momentum than the previous crash. Also while volume was higher during this break down, 34k vs 23k MACD signal line divergence was considerably less at -164 during the volume high of the breakdown last night. The takeaway is that sellers are winning yes, but there are still a lot of buyers gobbling up BTC and countering sell orders. If buyers are unsuccessful in boosting prices or sustaining them expect a massive sell off as they finally cave in to downwards pressure and liquidate their positions. In which case $8600 to $9000 is likely the next stop.

The 2 hour..… I hate this pattern (Bear Pennant) as I have seen it more than a handful of times and in most instances it is a ticket down. To be exact 64% of the time the ticket is down, 44% to the upside. This is most often a continuation pattern of price action preceding it; accordingly you can have bull pennants in an uptrend in which case the stats are essentially reversed. That said if we can break above $12,000 and hold we can invalidate the pattern and see what else develops. The indicators are at current not exceptionally positive. We are oversold on the RSI (good kinda)..Volume is declining indicative of a pennant. The histogram has us potentially closing out this period but it is just as likely to double down and go south with a follow on selling period. Again it’s a wait and see game, maybe small trades on the lesser trends with LTC, but I’m not particularly interested in wading around in these uncertain waters. I have drawn the potential pattern next to the price on the chart to make it a bit easier to distinguish.

BTC lesser time frames as the potential pattern shows up a bit better.

(BTC 1 Hour: Notice we are reaching overbought on the RSI as we approach the Apex.. No Bueno..

(BTC 5 Minute: Notice we are reaching overbought on the RSI as we approach the Apex.. No Bueno..

Bear Pennants:

My Previous Analysis:

https://steemit.com/bitcoin/@pawsdog/1-15-2017-the-market-view-and-trading-outlook

https://steemit.com/bitcoin/@pawsdog/1-14-2017-the-market-view-and-trading-outlook

https://steemit.com/bitcoin/@pawsdog/1-13-2017-the-market-view-and-trading-outlook

https://steemit.com/bitcoin/@pawsdog/1-12-2017-the-market-view-and-trading-outlook

https://steemit.com/bitcoin/@pawsdog/1-11-2017-the-market-view-and-trading-outlook

https://steemit.com/bitcoin/@pawsdog/1-10-2017-the-market-view-and-trading-outlook

https://steemit.com/bitcoin/@pawsdog/1-9-2017-the-market-view-and-trading-outlook

https://steemit.com/bitcoin/@pawsdog/1-8-2017-the-market-view-and-trading-outlook

https://steemit.com/bitcoin/@pawsdog/1-5-2017-the-market-view-and-trading-outlook

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