Hi guys.
Bitcoin has been in a consolidation phase since August 8th.
If you have been trying to trade in these conditions, you may have been already shaken out.
If you are trying to decide whether to HODL or sell and wait for $5k levels, you may have been tempted to sell (or have sold already).
Before you act, consider the following:
In the last few months I have been studying every single consolidation and reversal BTC has had since 2014. One pattern that keeps emerging is Wyckoff Market Cycle Theory. This is a price action market theory from the 1900's, which is still a leading principle in today's trading.
Wyckoff Market Cycle Theory has 2 main accumulation schematics:
Bitcoin has followed this accumulation pattern MANY times since 2015 and has done so the last 2 times it consolidated back in April & June (both of which have resulted in major break outs)
*** Note: I am using 12 hour charts for all of these ***
APRIL
JUNE
PHASE A: August 8th - August 13
- PS—preliminary support was hit on August 6th
- SC—selling climax was hit on August 12th
- AR—automatic rally was completed on August 13th
- ST—secondary test was hit on August 13th
PHASE B August 8th - ____
- ST— A lower secondary test was completed on August 14th
- Breakout Above the AR (automatic rally) was complete on August 22nd
- Waiting for LPS or Spring to take us into Phase C
Next Steps
Early on in Phase B, the price swings tend to be wide, accompanied by high volume. As institutions absorb the supply, however, the volume on downswings within the trading range tends to diminish (as is shown on April, June, and the current chart). When it appears that supply is likely to have been exhausted, BTC is ready for Phase C.
Right now the price is moving up steadily, however, I am waiting on the sidelines. I expect a sharp drop in price on low volume to retest $6,500 (if LPS) and then jump beyond 7k or $5,900 (if Spring). Would initiate a position if price holds for a swing trade However, wouldn't be surprised is another downturn is around the corner at a $7k - $7.5k resistance areas.
For those of you that are technical I urge you to 2x my work and find loop holes in my logic. This is what I am doing based on my analysis. As always look before you leap and don't blindly listen to strangers on the internet. Not financial advice :)