Here is my review in search of finding the BTC bottom. Hopefully, you will find the hidden answers after reading my post.
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1. What is the maximum level that BTC can be re-traced?
2. What is the maximum decline level that BTC has seen so far relative to the first question?
To answer these, one has to stay away from relative price levels. For instance, if I consider September (2017) price as a bottom assuming it will never be breached in future, I will always be wrong since it has a higher probability if the market crashes. One has to understand that BTC should always be referenced to a level that one can visualize as a permanent shut-down. If we allow re-tracing it back to that level, we will never speak relative price values and relative retracement levels.
Here is an illustration of what I mean. Back in 2014 rise, BTC saw a parabolic rise & climbed over $1150. Each stage is measured precisely by assuming BTC values $0.0 while it was falling from ATH. With this assumption, I can always re-trace it back to the natural occurring Fibonacci levels. I can now explain that BTC fell in six stages as illustrated in above figure. BTC saw two important pullbacks to Fib 23.6 and Fib 38.2 while continuing its journey towards an important Fibonacci level i.e. 78.6 where it finds its bottom and support.
Fast forward, BTC is back in the bearish market in 2018. We need to find the potential Fibonacci levels and correlate them with the past to find clues whether BTC will bottom around the same level or not.
Here is a present-day Market (April 02, 2018). BTC has achieved similar levels so far with only one exception i.e. #1 point finds support at Fibonacci level 38.2 while in 2014 this level was Fib 50%. However, the rest levels are the same. Importantly, the #6 level, which is the final stage, will be developed in coming months/weeks. With this comparison, one can assume that BTC will find a bottom around 78.6%.
However, the question still remains, if BTC will still fall below this 78% or not. To answer this, it is rational to consider crypto to fall around a potential level i.e. 89% (2100) that is rarely used. Since this is not a natural Fibonacci level & is based on speculation or historical levels, I would rather use a fundamental support level as annotated in the figure above. Assuming this level is no longer supported, I would consider BTC to be trapped below and will take months / a year to recover. As long as BTC is supported around 78.6%, I will be considering BTC in a long-term bullish market & will be happy to frequently re-charge my investments.
ETH has seen a nightmare since it wasn’t successful to hold above the Fib38.2% resistance for long. It has been traded above this level for some days but then saw a free-fall through Fib50% & Fib61.8% levels. It is now trading around a major support level as annotated in the above figure. Once that support level is broken, I will consider it to fall around Fib78.6% level, a level to where most of the cryptocurrencies will be supported. Furthermore, I also annotated an important diagonal red support line. If this support is also breached through, it will confirm the decline to be supported at Fib78.6% level.
Will ETH be a buy below? I would say yes. One should be very careful with speculation since the good price might be much below this level. However, our confidence about price action will come into play when ETH settles around this level and trades around it for weeks. When it will breakout this level again, then you know it is a good time for investments and you will end up with a safe asset. This will also minimize your risk since it avoids a 100% crash scenario.
Litecoin has not yet reached the expected support level (S1) or Fibonacci 78.6% (79.54). However, it has successfully broken the support level i.e. 61.8 (139.37) & is trading below. I consider it a valuable buy below Fib0.786 with a SL $62.56 if you want to apply risk-management tools. However, if the price falls below $62.56, I would be careful with my investments and will re-enter the market when the market breaks-out this level.
BCH has fallen much dramatically than others. It was already down to 78.6% back in Feb 2018 where it found a support level. However, during the pullback, it found a resistance at 61.8%(1563.94) and continued its bearish momentum. Nevertheless, I think this has already neared its bottom and the maximum retracement level would be $409, which will be my benchmark. If the price falls below, I would avoid trading this. However, if the price swings back & stabilizes above this level, I will consider it a safe trade & investment. Remember that, safe trading is confirmation of price by ignoring the FOMOs, FUDs and all other sentimental elements.
Perhaps DASH was the first one to see a DEATH CROSS in 2018. I haven’t done much research on that but I assume this was the first one. Just like BTC it was supported at Fib38.2%(884) and pulled back to Fib23.6%(1092) but could not hold above. Since then it just fell much below than Fib61.8% (548). A small pullback was evident on DASH as well during Feb 2018, which found a resistance around Fib50%(716). Since that time, DASH continued descending & is now trading below Fib78.6% (308).
Perhaps DASH has a bottom already. However, I would like to see it holding around this price for weeks or at least test the underlying support as annotated in the figure above (horizontal red line / $220).
Here is an illustration of Verge. Notice that it has already bottomed below 78% while it has seen the development of two local highs. Both highs are more like sideways movement below Fib78.6%. At this point, it looks like a great investment for coming months. I will think about this in few weeks to see whether it continues to decline or it breaks out the Fib78.6% resistance.
Tron saw a free-fall down to 78% but it pulled back to 61.8% level. However, since then it declined and is not supported at Fib 78.6%, which is much similar to XVG. I will look at it in coming weeks to see whether this support holds or breaks out. Or in the worst case, whether TRON goes below $0.01.
Dogecoin fell from the sky and found a support around Fib61.8%, however, it could not sustain and fell down to Fib78.6%. It re-tested the mentioned resistance level but failed to breakout. Thus, a further decline below Fib78.6 was guaranteed. It is not trading below this potential resistance and it perhaps a good buy. I will use this coin just to trade with BTC in future while the price remains below 78.6%.
Verdict
Whenever there is a crash, there are two supported levels that I use:- Fibonacci Level 0.786 / 78.6% relative to maximum low i.e. either $0 or $1 or around that.
- This level is theoretical in cryptocurrency i.e. 0.889 / 89%.
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Bitcoin
A very important question in the current descending market trend of Bitcoin, which is trading around 6900 at the time of writing this article. To understand this, one has to know two fundamental levels in BTC crash:1. What is the maximum level that BTC can be re-traced?
2. What is the maximum decline level that BTC has seen so far relative to the first question?
To answer these, one has to stay away from relative price levels. For instance, if I consider September (2017) price as a bottom assuming it will never be breached in future, I will always be wrong since it has a higher probability if the market crashes. One has to understand that BTC should always be referenced to a level that one can visualize as a permanent shut-down. If we allow re-tracing it back to that level, we will never speak relative price values and relative retracement levels.
Here is an illustration of what I mean. Back in 2014 rise, BTC saw a parabolic rise & climbed over $1150. Each stage is measured precisely by assuming BTC values $0.0 while it was falling from ATH. With this assumption, I can always re-trace it back to the natural occurring Fibonacci levels. I can now explain that BTC fell in six stages as illustrated in above figure. BTC saw two important pullbacks to Fib 23.6 and Fib 38.2 while continuing its journey towards an important Fibonacci level i.e. 78.6 where it finds its bottom and support.
Fast forward, BTC is back in the bearish market in 2018. We need to find the potential Fibonacci levels and correlate them with the past to find clues whether BTC will bottom around the same level or not.
Here is a present-day Market (April 02, 2018). BTC has achieved similar levels so far with only one exception i.e. #1 point finds support at Fibonacci level 38.2 while in 2014 this level was Fib 50%. However, the rest levels are the same. Importantly, the #6 level, which is the final stage, will be developed in coming months/weeks. With this comparison, one can assume that BTC will find a bottom around 78.6%.
However, the question still remains, if BTC will still fall below this 78% or not. To answer this, it is rational to consider crypto to fall around a potential level i.e. 89% (2100) that is rarely used. Since this is not a natural Fibonacci level & is based on speculation or historical levels, I would rather use a fundamental support level as annotated in the figure above. Assuming this level is no longer supported, I would consider BTC to be trapped below and will take months / a year to recover. As long as BTC is supported around 78.6%, I will be considering BTC in a long-term bullish market & will be happy to frequently re-charge my investments.
ALT COINS Bottom
Ethereum
ETH has seen a nightmare since it wasn’t successful to hold above the Fib38.2% resistance for long. It has been traded above this level for some days but then saw a free-fall through Fib50% & Fib61.8% levels. It is now trading around a major support level as annotated in the above figure. Once that support level is broken, I will consider it to fall around Fib78.6% level, a level to where most of the cryptocurrencies will be supported. Furthermore, I also annotated an important diagonal red support line. If this support is also breached through, it will confirm the decline to be supported at Fib78.6% level.
Will ETH be a buy below? I would say yes. One should be very careful with speculation since the good price might be much below this level. However, our confidence about price action will come into play when ETH settles around this level and trades around it for weeks. When it will breakout this level again, then you know it is a good time for investments and you will end up with a safe asset. This will also minimize your risk since it avoids a 100% crash scenario.
Litecoin
Litecoin has not yet reached the expected support level (S1) or Fibonacci 78.6% (79.54). However, it has successfully broken the support level i.e. 61.8 (139.37) & is trading below. I consider it a valuable buy below Fib0.786 with a SL $62.56 if you want to apply risk-management tools. However, if the price falls below $62.56, I would be careful with my investments and will re-enter the market when the market breaks-out this level.
Bitcoin Cash
BCH has fallen much dramatically than others. It was already down to 78.6% back in Feb 2018 where it found a support level. However, during the pullback, it found a resistance at 61.8%(1563.94) and continued its bearish momentum. Nevertheless, I think this has already neared its bottom and the maximum retracement level would be $409, which will be my benchmark. If the price falls below, I would avoid trading this. However, if the price swings back & stabilizes above this level, I will consider it a safe trade & investment. Remember that, safe trading is confirmation of price by ignoring the FOMOs, FUDs and all other sentimental elements.
DASH
Perhaps DASH was the first one to see a DEATH CROSS in 2018. I haven’t done much research on that but I assume this was the first one. Just like BTC it was supported at Fib38.2%(884) and pulled back to Fib23.6%(1092) but could not hold above. Since then it just fell much below than Fib61.8% (548). A small pullback was evident on DASH as well during Feb 2018, which found a resistance around Fib50%(716). Since that time, DASH continued descending & is now trading below Fib78.6% (308).
Perhaps DASH has a bottom already. However, I would like to see it holding around this price for weeks or at least test the underlying support as annotated in the figure above (horizontal red line / $220).
VERGE
This might not be very important for some people but for my technical analysis, it is. Altcoins are minnows and should bottom earlier than Bitcoin since all money circulates/trades around it. Since it helps me to see the altcoin market bottom confirmation and assess Bitcoin, Ethereum, and Litecoin future.
Here is an illustration of Verge. Notice that it has already bottomed below 78% while it has seen the development of two local highs. Both highs are more like sideways movement below Fib78.6%. At this point, it looks like a great investment for coming months. I will think about this in few weeks to see whether it continues to decline or it breaks out the Fib78.6% resistance.
TRON
DOGECOIN
Dogecoin fell from the sky and found a support around Fib61.8%, however, it could not sustain and fell down to Fib78.6%. It re-tested the mentioned resistance level but failed to breakout. Thus, a further decline below Fib78.6 was guaranteed. It is not trading below this potential resistance and it perhaps a good buy. I will use this coin just to trade with BTC in future while the price remains below 78.6%.
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