Bitcoin Price Analysis
August 16 2018
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Good afternoon traders. We have some interesting developments in the world of crypto today that could definitely have an impact upon price action.
Yesterday we learned that a large amount of BTC (18k) was transferred into a wallet believed to be associated with BitMEX. Speculation that this was an attempt at market manipulation (as it was pointed out that several hours after this large transfer the price recovered from sub 6k level) ran amok over Twitter and Telegram.
Today we received an announcement from Coinbase that they now have a new digital wallet that was formerly Toshi. Now as you'll notice from the pictures there are several tokens listed in their wallet on the picture. Basic Attention Token, 0x Protocol, Maker, and Ethereum. Now I've been on record talking about my like for both BAT and 0x, if you're a member of our discord or a regular follower of my content. I believe they have legitimate use cases, and they've been very profitable to trade over the last year. We will be taking a deeper look into them coming up soon. However I will say that caution is merited here. Coinbase has a long history of 'teasing' us with rumors and then switching up at the last minute. Some of us who incline to the more cynical side of the personality spectrum would say that by 'teasing' we mean 'intentional market manipulation', because we know very well that if Coinbase says they will list a particular token that the price will invariably pump. So I will say that if you practice good risk management, I don't see the harm in taking a speculative swing on those three tokens, however for purposes of long-term functionality and staying power I recommend BAT and 0x, I am not as familiar with Maker.
OK let's look at price action today.
Overall Outlook
Price has been stuck in ranging mode (I've taken to calling myself The Lone Ranger in BitMEX chat...) for nearly two weeks now. I have plotted the bands of support and resistance, and although they're not displayed on the chart these are not arbitrary lines drawn to accommodate just price action.
VPVR Volume Profile also confirms these bands to be the highest nodes of volume. That means these are areas that price will want to return to, as buyers and sellers believe these are good value areas. Either they believe that this is a fair market price, or a psychological level that they believe will turn price a certain way. I would like to say that Bitcoin has advanced that people think that a buy at a particular price is good because "it's a good price" however in the current market, with all the speculation, the reality is that traders and investors are snagging lots of Bitcoin at a particular price because psychologically they believe that it's likely to turn around there.
Take the current zone of support. The 6k area is obviously a very high point of psychological support for Bitcoin traders right now. Price has reversed there three times since we fell from the ATH through January/February. One quick perusal of YouTube/Telegram/Twitter Crypto will be a blend of the following two sentiments:
Sentiment 1 (Optimism): 6k Will Hold! This is the price institutions are buying BTC up at and we're going to moon soon! Woooooh ETF BABY!
or
Sentiment 2 (Pessimism): Oh man if 6k doesn't hold we're going to 5 and 4.2 and maybe 3k! Oh man oh man oh man we have to hold 6k because if we don't the entire BTC market will crash and the Black Hat Illuminate Lizard People will be in control of all finance FOREVER!!!
Now I'd like to stay away from psychological sentiment, or irrational exuberance, or whatever you'd like to call it. And just stick to the charts and what I consider to be my personal common sense. What I am seeing from the charts is a belief that 6k is a viable price, and I believe there is a large number of Bitcoin investors who will strive very hard to hold that price for ideological reasons. However, there is always the risk of collusion to strive to push the price down for cheaper institutional purchasing opportunity. I think this is short-sighted, however I do not reside inside the minds of these individuals. Personally I think a fall from 6k will be a harsh blow to the faith of investors, and even though as I've spoken about in my previous YouTube videos these institutional investors have the power to launch a massive marketing campaign once they have bought up enough BTC to make it worthwhile for them, and that this IS how mass adoption will occur. Yes, you heard that right. Mass adoption will likely not occur from people standing on soapboxes and trying to proselytize people into the Bitcoin mindset. No matter how eloquent Andreas is, he will never convince as many people to adopt Bitcoin as a Bank of America advertising campaign will. A Chase marketing campaign would get more people to adopt Bitcoin in one month then all the Crypto Twitterverse could in five years. That's just a fact.
So where is price going in the near term?
Well there are two clear possibilities here. I don't believe we will drop below 6k, and if we do, it won't be right now. That means that we either consolidate at current price level (which is the POC via the VPVR, roughly the current price) to build momentum so we can break resistance at 6.6k. If we break 6.6k we should be able to hit 7k fairly easily, there is very little volume traded between those two points and 7k IS the next strong node bundle of volume. We will re-evaluate when that happens.
Scenario 2 is a re-test of 6k before we build momentum to move more strongly back to re-test 6.6k. I would like to not say re-test, because this would be our fourth attempt to breakthrough and a failure this time would really mean a failed rally. However I'm inclined to believe more strongly in scenario #1.
Recommendations for Trade
There is no strong trade on the table right now. If you're a member of our Discord we just exited our long position at about 7% profit, not counting your leverage.
Fisher Transform shows us a ranging consolidation around the 0 line, DMI shows a weakening in trend and consolidation, and volume is worthy to sneeze at.
Unfortunately, the Bid Ask Sum, which is proven to have a marked effect on price shows a weakening of Bids. Positively, we do not see a marked increase in Asks, as that would lend more credence to a decline in price. This composites with our above information from the chart to tell us that price is ranging, and for the moment, not going anywhere.
Also, after a brief rally of longs (although in truth the volume was quite weak...) we see that just as the Bids have dropped off, so have the longs and once again the shorts have marginally taken control again. The positive news here is that again, this volume is weak, and shorts are just barely more dominant than longs, so this lends more credence to a consolidation and ranging price action.
Be careful out there traders. Do your own research and make your own moves without regret and with careful risk management. Be calm and make the right move, don't let yourself be inundated with irrational exuberance, or a necessity to trade or believe price action will do one thing or the other. Many of us are hurting after such a steep decline in price, especially those who invested in altcoins. This type of environment can feel like psychological torture to those who just want to see their ROI grow and stop bleeding out all of their profits, if not their underlying capital at this point. However, irrational decisions does not wealth or a good trader make. Stay calm and think carefully about what you need to do, and remember that good things come to those who wait. Be safe out there traders!
Sincerely,
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I'm not a financial adviser. The information here is for educational purposes. Trading and investing are wonderful things to do, and it's OK to take advice and to learn. I'm glad you're here right now reading this, educating yourself. Don't take my word as the gospel, and be careful. All investment and trading opportunities carry risk, I'm sure you reading this have the potential in you to profit from a careful trading plan, and wise investment choices. Do it right, do your research, and don't trade stupid. Very best of luck to you!
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STOPVery useful information.