Tuesday, 6 March 2018

Bitcoin: More Pullback to Come After Failing Breakout

As i mentioned in my previous post on Bitcoin that price needs to rise above the purple falling channel to end this downtrend or correction mode.

Since that post, the price falls below the strong resistance of 50% Fib band. After this brief pullback, it makes another attempt at the 50% Fib band, but once again, it fails. This proves to be a strong resistance. In addition to this, the price also encounters the upper resistance of the falling purple channel. And so with this double resistance, the downtrend continues.

Bitcoin chart, March 2018, showing break down and double tops
(Click chart to enlarge)

With this break down (as  shown in chart), i decided to exit this trade that i entered around $8,300 (just above the 200D MA). A 30% gain in a few weeks doesn't seem all that exciting when one is expecting 20x their money in less than a year (as happened in 2017). In any other market, this is an impressive performance. But then in any other market, i trade with real money. While in Bitcoin market, i put in only play money.

Possible scenarios (from the most likely to the least likely):
1.  While the downtrend looks to continue, but i don't expect the price is heading towards the bottom of this purple falling channel. Rather i think the 200D MA (red line) should provide support.
2.  It may even just fall to the previous low (of ~$9,500 to ~$9,700) and forms a bullish double bottoms. I think this is likely.
3.  At worst, YTD's low of $6,800 should provide support. Although i don't think it would get this low.
4.  Is it possible that this is a bear trap where the price quickly reverses and breaks above and ends this downtrend? Of course, it could. But i don't think so (unless there's a big unexpected positive news announcement. This is just hoping, not trading).

Scenario s 1 and 2 are to close to call (because the price targets for these 2 scenarios are very close). I give it similar odds of playing out.

Once again, we needn't speculate. Just wait and see. It takes only days to confirm it, one way or another.

And you don't go broke by taking profits.

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