Bitcoin: Fear the FOMO

I gotta say, I’ve been busy. I haven’t had a minute to watch Bitcoin let alone trade it. When you’ve been around for a while, days like this are heartbreaking.

About a month ago I updated my charts with a developed ascending wedge. These are a great measure of direction as a range breakout is imminent. Though they are typically bearish patterns, they are something to watch in bullish markets.

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Hadn’t checked back and wasn’t even thinking to. Saw tickers at US$500 and just about died when I opened the chart. Textbook wedge confirms a bullish trend on yet another massive breakout.

If you’ve missed it, you’re not alone. The FOMO is strong with us.

Alright here’s the science:

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First, volume – wow. Increasing on dramatically higher highs. That is demand. Until this stops happening, I have to consider it’s not done. Why? We haven’t seen extreme volume in the range (see daily) or price on tight spreads, it could just be clearing its throat. The broader trend here is bullish – look at those higher highs on range, wow. To short this is betting against the trend – clearly. The bias will be that longs off higher lows will yield the highest return – and it could be glorious if Bitcoin has come back to life.

Also, note the supply up here – that is a real level. We’ve found our next line in the sand and it just so happens to be sitting between some patterns I drew back in 2015. Coincidence? Whatever you say.

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Major historical fibs in play here. Terrifying sight for longs though. Nothing but hopes and dreams holding price above that R3 if we break support here. Absolutely no point to chase now. It’s done son. Wait for it to come to you.

We’re up against the best and they got size to move. No point fighting that. They can run, but they can’t hide – it’s all in the volume now. It’s clear they’re accumulating but if you think they’re going to give up cheap prices easy, think again.

They’re going to blow everyone out they can – on both sides – maybe even more than once after a big move like that. Remember, they’re marketing a massive position they just showed the entire world. They will still destroy you because they are just that damn good. They could crash the level right now and send us running for the R3. A cheap markdown that nets them supply at a discounted price. Their motivation is only lowest average cost. Horrifying spot.

Hokay, so

Alright. Recap. Broader terms looks bullish AF and BTC could be coming back to life. That means sooner or later – its going to want to test ATH’s, maybe even the moon. Enormous upside potential and resounding bullish technicals.

On the down side, there is no support for these prices. A pullback could be dramatic and almost seems logical. We have to wait for cover to get long. Luckily, the R:R potential here on shorts is also very attractive – if we’re careful (explosive upside potential in the background).

Selling lower highs on the 4H plus seems like a good plan while we wait to buy higher lows.

The entry signal is always a volume burst confirming effort (15M is okay). Whichever way you’re going, wait for the burst to establish the range and for a low volume pullback to enter. If you notice the market come to a near silence after the chaos – giving back much of the range, that is last call for discount. You better be on it because it’s a fast train outta the hurt locker. You need to get as extreme in the range as possible for your entry because your stop is a new high or low (depending on side) of the volume burst candle. The more extreme, the lower your risk, the bigger your position size. Make sense? Thought so.

That’s it for now. I’m going to revenge FOMO this like I revenge FOMO’d my 2014 shorts. Just in case. Could be the elusive big dirty.

By the way, if you like my charts, here’s the interactive version including my TA of OKC BTCCNY.

Happy hunting.

 

Aurie Philipchuk

Managing Partner of Tractai. Blockchain enthusiast. Jack of all trades. Interested in building the new generation of great companies? Let's connect.

 

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