We've been on this road since the ATH, but the exact route we would take on the way has been cause for much debate. We had one bull trap at 17.2K, but everything since has been heavy. Even my own forecasts for a momentary sunny trip to the topside of the pitchfork (before more winter) have fallen flat as we just keep slumping to the bottom with greater velocity. There's been no fuel for the bulls, despite decent Weiss grades, S.K. government action turning positive, and new optimistic futures contracts. Instead the market responds swiftly to FUD, whether it's hacked exchanges or speculation on the looming specter of Tether insolvency. So, the math is simple: lame rallies + strong dumps = more down, not much upside.
For weeks we've heard various targets for the "bottom" of this correction, some magical place where the pullback from the peak would finally reverse and the bulls would get their mojo back. I aimed for 8K on my previous charts, and as the correction goes on, that target has come into sharper focus. I'm now expecting the next leg to take us to $7,900 (on Bitstamp) where there is a notable convergence of important overlapping TA features:
The bottom of this correction pitchfork channel, which I've now slightly adjusted (compared to my old one) to fit the actual precise wick bottoms of the selloffs on Bitstamp. Previously I had locked the top to the 17.2K peak to set the angle, and the last selloff to 9.2K I had assumed was an overshoot. Now I can see it that the bottom wicks were quite accurate, and I should ignore the top wicks above 17K, as it internally validates many more data points now.
The support/resistance line at $7,900 that was defined back in November, on the way up the rally slope.
The 0.705 OTE retrace of the entire rally from $2,972 to $19,700 lands *right on* that same S/R level. Too perfect. Like spooky perfect. Seriously.
The rising 200MA, which should provide some support after we dropped off the 100MA when we couldn't hold the 50% retrace fib.
The white trend line connecting the May 25th peak to the Nov 12th bottom (which prophetically touched the not-yet-existing 0.845 level, funny how that works...)
These all converge in a couple days (Feb 6-7), and we just kissed the 0.618 fib on this last drop to $9,350 (Bitstamp is serious about its fib touches). We need a recharge to fill up the bids again over a few days, so we should see a slow crawl up to the congestion zone around $11,200 again -- then the order books will be ready for heavy dumps taking us on another steep drop -- or we could just tumble down from here, trapped under the old bear line we were so excited about breaking above just recently :P
After hitting the fabled "8K" that everyone's been chanting about, we should see a solid bounce back up to the 100MA, the 11,150 S/R zone, and enjoy more sideways ranging from 10K-11,5K underneath that 50% fib, until finally the folks who went long on futures contracts start goading the bulls into launching us out the top of this correction channel. Looking for a top on that 3rd wave around 15-16K. Might be setting up for another bull trap and slow slump just like how the 2014 bubble bear market started...
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Closeup of the correction pitchfork, as seen in my "Rinse, Wash, Repeat" chart
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I don't usually give dates, but this convergence zone clearly has a time associated, so I knew we were looking at Feb 6th, and figured there would be some FUD news coming out just before that would set off the selling -- and here we go, looks like US Senate hearings on that day :P coindesk.com/sec-cftc-chiefs-set-senate-crypto-hearing-next-week/
Trade geschlossen: Ziel wurde erreicht
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Orders at 7900 got filled a little early ;)
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There are plenty of bears calling for deeper dumps. Because hey, if we broke 8K, who not 7? 6? 5? Of course anything is possible, there are no absolutes -- but it's quite helpful to look at the current sentiment of the bears on Bitfinex, in terms of total open Long vs. Short positions. Once we hit 7900, the number of open shorts plummeted. We had a huge spike in shorts anticipating when we fell off the 50% fib at 11,000. But if we were really about to fall off the cliff *from right here* -- you'd see it.
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There are other indications that this is the relative "bottom" of this selloff (not forever, just local to this move). Look at the 4H RSI levels for the panic dumps on Dec 22nd and Jan 17th -- we are at the exact same level and have started back up. Even if you don't believe we're going to moon from here, and you think we have to get to 6K before this entire correction is over and the bull market continues -- we have weeks of climbing and recharging the RSI before we should be plummeting to that level again.
We are really in the grip of bears at the moment. The support at 10k was strong and the price bounced off it several times in January but I got the feeling that the support wouldn't hold any longer after this many bounces. I was hoping this was just a consolidation phase and nothing worse. But the worst happened today and the long term trendline was finally broken as it went under 8.8k. So now we are looking around 5.6k-6k for the next support.
The price has temporarily rebounded and testing the 8.8k resistance. If the test fails, get ready because this is gonna one long bear market. I feel this is nothing but a shakeout of weak hands. The FUD is strong but not that strong for a 100% retracement but the market was indeed getting too optimistic with ridiculous gains throughout 2017. A lot of shitcoins got pumped heavily and they are now being flushed down the toilet to establish proper valuation. This is all probably for the best as it will deflate the bubble many people were talking about and allow fresh money to enter the market.
Dinomagic
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@nginx, this makes good sense right here. I too feel we are on the way down to 4-6K range.
nginx
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@Dinomagic, We are probably not going down to 4k. If the support at 5.6k breaks (which is absolutely critical), we are probably looking at a year long bear market.
Mikelikescrypto
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@nginx, thats isnt going to happen yet. This is just an above average correction. It should be over around feb 17 to march 17.
The point is to make people short the market, the biggest bears are extracting wealth from most of the people selling in these conditions.
Just when it all seems to be the end, the bulls will return.
josephtse
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@nginx, Year long bear market is a likely scenario like 2013-2014 and is preferred. We need an 80% fall to cleanse the market and establish fresh money to allow price to now climb to double, $40,000 (10x, of 4000 which repeats past fractals every 3 years).
darkandblue
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let's see;
is the overall uptrend broken? nope
is the 200EMA broken? nope
is there any real regulation threat other than just fud? nope and now we even have futures for it.
ok, then this is just a correction.
EduardoCantelli
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If you are here and you do not believe in the system, you do not understand the system, so you should speculate elsewhere. The child is being born and the parents have no experience. But remember it is a new being, most likely a savior. Know this, be calm. Either you will lose a little money, or you will help change the world. And still enrich. Greed and fear will always exist, focus on something greater.
Doctor, psychoanalyst at your service.
Weavs844
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@EduardoCantelli, Yea, maybe others are. But I'm not here to donate money to a cause. Sorry Doc, I'm a broken toy beyond repair.
The price has temporarily rebounded and testing the 8.8k resistance. If the test fails, get ready because this is gonna one long bear market. I feel this is nothing but a shakeout of weak hands. The FUD is strong but not that strong for a 100% retracement but the market was indeed getting too optimistic with ridiculous gains throughout 2017. A lot of shitcoins got pumped heavily and they are now being flushed down the toilet to establish proper valuation. This is all probably for the best as it will deflate the bubble many people were talking about and allow fresh money to enter the market.