1/8/2017 The Market View and Trading Outlook

Pucker factor check… lol..

So WTF is going on with BTC? Not much really, a correction and pullback from the highs of the last week. In my humble opinion this is a nice shakeout, and opens up opportunities to buy discounted coins and make a profit again. That said the most dangerous game you can play right now is called "pick the bottom" before you have confirmation of trend reversal.

It’s tempting, it really is to say “this is the bottom, I’m buying” only to see it loop up and then crash right back down through your buy point to a lower low. One simply does not pick the bottom, the market does. As for me I prefer to buy into an uptrend as opposed to throw money at a falling asset.

Does that mean I will miss a few points here and there by not grabbing at the absolute bottom? Sure… Does that mean that I avoid getting whipsawed around buying at imaginary bottoms and slowly watching my capital get eaten away.. Yes.. More often than not, buying into the trend is better than purchasing against it.

In simplest terms, we buy into an uptrend because odds are the price is going up. Why then would the inverse not hold true that in a downtrend the price is more likely to go down? So why would I buy? The only reasons would be greed, stupidity, lack of patience and a desire to abandon my rule set based on my feelings and emotions; none of which add long term success and will always eat your capital away over time.

I think perhaps that greatest skill required to trade successfully aside from discipline, is patience. Bitcoin has unfortunately indoctrinated the inexperienced to expect $1000 or 5-10% gains each and every day and if it fails then its crashing and it is time to sell everything.

Trading is a game of discipline, patience and following the rules even when you “FEEL” differently than what the rules are telling you. Take for example LITECOIN, I called it a buy on Friday, it was, it went up 60 points in 5 hours, and while I FELT it had room to grow and could try and reach previous highs, the rules were telling me other wise and we had a downside 7/21 cross around $287. So despite the fact that I “FELT” it was going to hold or go higher, I sold per my trading strategy and it now sits around $240. I locked in my 20% or so profits made several thousand and now I’m waiting for the “RULES” to tell me when to buy again. This is primarily why I can never be a HODLER. I just don’t have the balls to HODL and in order to do so I would have to violate my trading rules over and over again by failing to act on buy and sell points throughout the range.

So onto the charts.

On the 12 hour we have had two of three sell indicators thus far we had a RSI cross at $17,000 followed by and MACD/Signal line cross at $15,800, the 7 period moving average is now trending down and the MACD histogram has us in a selling period. We are currently 2 bars into a selling period that typically lasts 5 or more. The 7 period moving average is still above the 77 although it is likely to come down and do a bounce as price may hit the $13,000 range. The 21 has failed as of yet to break upwards of the 77 which would be extremely bullish. At current it seems content to ride just below the longer term moving average as price trades sideways. On the positive side we are still above the MACD 0 line and selling volume is not over the top. Remember that everything is relative and the further out you go, the more the picture changes. In looking at the 12 hour objectively we are still trending up, which should continue so long as we do not break below $12,500. Remember everything is a matter of perspective and you always need to step back and look at the bigger picture and avoid getting sucked into the smaller time frames. $15,000 will be a key resistance point in this most recent pullback. Also price pull back to the 77 following a 7/77 upwards cross is a fairly routine event and why I typically only buy 21/77 upwards crosses to avoid being shaken out.

The six hour is still fairly neutral in the grand scheme of things. Do I think price is going down more? Yes. This based upon the indication that we are about to experience a 7/21 downwards cross; bearish. That said, I have to look at the bigger picture, that being that we were able to break the 21 above the 77 two days ago at $14,800; the last time this occurred price was at $6000 and went to $20,000. Also price pulling back to the longer term moving average after breaking above it is a natural occurrence that happens in all time frames.

So in looking at the objectively bigger picture of this time frame it is still bullish in that this is an ultra powerful moving average/time frame combination. It will take significant and prolonged downwards price action to break the 7 and 21 below the 77 again which would indicate bear market territory. The last time the 7 crossed below the 77 (red circles) price went from $16,000 to $10,000 to give you perspective on the power of this time frame and moving average combination. That said I do advocate EXTREME caution as a 7/21 downwards cross in this time frame is a powerfully bearish indicator as well and provided the momentum for the dive from $18,000 to $10,000 at its last occurrence (blue circles). Key battleground will be the 7/77 moving averages, if I see a downwards cross there I’m out for a bit to wait it out, till then I’ll play the trends on shorter time frames.

The four hour is neutral. We did have a 7/21 downwards cross following an RSI cross and MACD/Signal line cross. Price found support at the 77 and we are deep into the most recent selling period according the MACD histogram. If we can break upwards of $15,000 we should have a buying period of some degree that allows opportunity for profit making, whether or not it will hold remains to be determined as the 12 has us in a sell off. Remember the lesser time frames occur many times with the larger time frames. So you can have buying periods while the market is trending down. A market such as this is great for profit making using simple moving average cross over strategies. Based on my momentum I’m thinking we get another lower low to the $13,000 range before we enter a another 4 hour buying period, that may or may not hold.

The two hour is ugly no matter how you look at it and coincides with my opinion that a lower low is still in the cards. We had a 7/21 downwards cross, followed by a 7/77 downwards cross which indicates significant downwards momentum. Additionally the MACD 0 line has been broken and we have higher than average selling volume. What we do not want is a 21/77 downwards cross as that is not a good sign of things to come. I have included my projected trend lines which basically are the same as they were last time I drew them on 1/5/18 and showed a 7/21 downwards cross. The article is here: https://steemit.com/bitcoin/@pawsdog/1-5-2017-the-market-view-and-trading-outlook

The 1 day, contrary to how it may look at first glance is bullish for the long term. Yes, we are in a selling period that has brought price down. Yes, this is likely to continue throughout the day or for a few more days. That said it mirrors the 12 in that we are trading sideways and trending up. When in doubt draw lines (yellow lines). But more important than that we have a 7/21 upside cross that indicates price is going up over the longer term.

In fact I challenge any reader to go here: https://cryptowat.ch/bitfinex/btcusd/1d set your simple moving averages at 7/21/77 and find me a single instance in BTC recorded history where a 7/21 upwards cross above the 77 was not followed by a significant increase in longer term price.

Basically this chart is a dream for HODLERS. Remember though this is a DAILY chart so what plays out in this time frame can take days or weeks to occur and is not an overnight event.

I know that through my writings some indicators are bullish, while some are bearish, which is true. I am not trying to play both sides of the fence so as I am always right. You can have bearish indicators in 1 time frame and bullish indicators in another. In the longer term say a month, price may go up 20 percent or more but during that time frame you are going to have numerous sell offs of 5,10 or 15 percent in smaller time frames. The same holds true in a down trending market, over the course of a month or more price may decline 50 percent but in the smaller time frames there will be many 5,10,15 percent buying periods prior to stalling and continuing with the larger trend. In this instance according the 12 hour and 1 day, the longer trend is upwards for the moment, though we will stumble fall and sell off along the way. I do hope that makes sense.

LiteCoin. Wait for your next buying opportunity. Did I call Litecoin to go up on Friday? Yes.. and we got 60 points out of it which equated to an excellent profit. Did I "FEEL" as though it had room to go higher at around $300? Yes.. Did my rules tell me other wise and force me to sell in direct conflict with my "feelings"? Yes. Accordingly I bought in heavy at the 21/77 cross around $245 (Green Circles), added to my position in decreasing 10 percent increments at pullbacks on the 15 minute along the way to $300 and sold at the 7/21 downwards cross (red circle) on the hourly at $186. I lost any trades above $186 but as those were add ons to my core position and any trades below $186 were profitable I locked in just over $10,000 on that move. YOU CANNOT WIN EVERY TRADE, IN FACT YOU CAN LOSE PLENTY OF TRADES AND STILL BE A VERY PROFITABLE TRADER IF YOU ADHERE TO YOUR RULES ABOVE ALL ELSE.

Previous Analysis:

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

https://steemit.com/bitcoin/@pawsdog/1-4-2017-the-market-view-and-trading-outlook

https://steemit.com/bitcoin/@pawsdog/1-3-2017-the-market-view-and-trading-outlook

https://steemit.com/bitcoin/@pawsdog/1-2-2017-the-market-view-and-trading-outlook

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

https://steemit.com/bitcoin/@pawsdog/12-31-2017-the-market-view-and-trading-outlook

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