Bitcoin Pullback Anaysis

Prognosticating price action, i.e. trading is an endeavor fraught with danger. This is why I have learned that I am NOT emotionally equipped to do it. So I either speculate, or invest in things based on research and hard data and generally ignore the charts until I am ready to invest.

So keep that in mind when reading this. My tendency is to be EARLY on the way in when I do trade which is why I tend to avoid it if possible. One thing I have noticed is that the charts always seem obvious AFTER the moves are over and in the past. it is guessing where they will be in the future that is almost impossible. Moves up and down are obvious to a child AFTER its all over....

Having said all that, the recent pullback has me perusing the charts like a teenager with a new Iphone. It is hard to keep my eyes off of this. Thank goodness I properly sized my speculations. This helps me remove ALL emotion. Once you are into thousands of percent profit with tiny amounts of initial investment capital the game becomes highly entertaining and NOT stressful.

My theory here is pretty straightforward...with a bit of a fundamental twist. On the day chart you can see we are retracing fibonacci's pretty tightly. We are testing the 50% retracement level and if we break through this we will most likely go down to the 61.8% level. That's a pretty hefty drop, but it is not as bad as I have seen in this space in the past. It actually seems to be a little more orderly a market since the hedge funds started pouring money in.

Herein lies the conundrum. There is a gigantic pool of money flowing into a relatively tiny market. This is giving me a bias to the upside. Any pull backs should be thought of as a buying opportunity here, because we haven't even gotten out of the first inning of this game and there is so much money in the pipeline for this whole ecosystem.

Anyhow, You can see the little hook at the end of the 20 and 50 EMA on the chart below. This market is so volatile that the moving averages are not acting right. These markets are still too nascent and thin for that indicator to work all that well at this time. Normally the time it took for such a hard move down would have had the 20 EMA crossing below the 50 EMA and this would be very bearish, but that didn't happen.

The volume is robust but not extreme. This is why I think we will have one last bearish push. We need to paint that huge volume bar on the down side. Really big, that will be the exhaustion trade and the market SHOULD move up from there. That would be if this were the stock market. But these are crypto currencies and as such they are ridiculously volatile. The turn can happen in a few minutes and the price can rocket so high you miss the whole scene baby!

We have broken the uptrend established from the beginning of the year, but I believe that this is due to the whales manipulating this market. They are squeezing out as many dollars from the poor saps who bought at the top before they themselves sit on the ask and back up THEIR trucks to load up.

This is why I do NOT trade, however I DO find it entertaining while I practice the discipline of investing and speculating. Any truly successful speculator can tell you, that most of this game is patience. If you properly manage your position sizes there is no problem handling emotions. Then this becomes a highly entertaining game, like it is for me. Most of success you have with investing, trading and speculating comes from doing NOTHING until your theories pan out....or don't!

This can take YEARS sometimes. YEARS of having a portfolio that is lagging everything else, sometimes even at a loss to initial capital. But then, eventually after you have forgotten about your speculation some catalyst finally happens and you make up for all that 'lost' time and then some.

But I digress. Long and short of it I see a bottom at either $10500 if we turn at the 50% retracement, or say $8500 if we go all the way back to the 61.8. Maybe even a flash crash orchestrated by the hedge funds along the way....who knows! THis IS the wild west still.

I am watching, waiting and accumulating dry powder (USD) for a truck back up once the bottom is in and we are turning upwards. Probably I will NOT time it right, I tend to be early remember. But thats why I never put all of my money in at once. I put it in in tranches of no more than 10 to 20% of the total and no quicker than once a week. but that's just me.

Of course, being the cagey Klingon type of speculator I am, if I saw something like a flash crash down to like $800 for BTC, I would lose all sense of self control and mortgage my house to back up the truck and acquire everything I could. Im in this for the long haul. It will be interesting to see just how far I can go ...

....and yes that WOULD be foolish! I'm human too and anyone who tells you they 'know' what is going to happen in the future is delusional at best! ALL markets are EXTREMELY efficient......at taking huge sums of money from foolish gamblers. Information in this space is sketchy and you better know your sources. Are they selling you something? Do they really know what they are talking about?

Caution is of PARAMOUNT importance in all investing, but Bitcoin is caution on steroids territory. There is no hurry, and no need to risk much more than your change drawer money on it. We have plenty of time and we have a good source of information. So sit tight and enjoy the ride.