One of the keys to doing anything well in investing or trading, is understanding the movement of things. There is a dance in crypto, and sometimes we do not know the ultimate choices the market will make, but we have a good idea of the dance it will take arrive at any of the possible outcomes. First, let us look at the current rally:
Green: Leg 1 of 3-phase rally
Blue: Leg 2 of 3-phase rally
Red: Leg 3 of 3-phase rally.
On these rallies, you want to sell at the top of phase 2 or phase 3 if you are nimbly moving with the market.
This also means, I expect a 3rd phase to the current BTC rally up to 8,500 USD. Before the 3rd-phase occurs, the 2nd phase has a solid pull-back / stall.
Going forward, normally I would just look at the dance of the market. However, the raw technical analysis going forward has been impacted by a major foreseeable event impacting BTC in August & September 2018. The event could be highly positive for Bitcoin, and it could also be short-term negative. I am speaking of the ETF decisions.
Fundamental News Affecting Bitcoin in August and September - EFT Decisions for Bitcoin
News is out today that some ETF decisions for BTC have been moved to September. These five ETF decisions were all submitted by Direxion, and they are different from the COBE Global Markets ETF decision which are expected in August.
The most likely one to succeed is the CBOE Global Markets proposal, which has a hefty insurance policy, and is also tied to the CBOE. The CBOE being involved in the ETF makes it ten times more credible than previous ETF decisions, in my viewpoint.
The Impact of ETF Decisions
As long as the major CBOE ETF decision for Bitcoin remains unresolved by the SEC, the Bitcoin market is unlikely to tank below 7,200 USD. This also creates a "wait and see" mentality for the market while prices hold.
Price Behavior for BTC Going Forward
This is a predictive model I use when I believe price could swing in multiple behaviors going forward. We just look at the different ways BTC could swing, while meshing in the near-term fundamentals which support price into the August decision:
What we have to understand about the CBOE ETF approval is that if it is not approved, then the September ETF's for Bitcoin will also most likely not be approved. I would give it 90%+ odds that the CBOE ETF decline is an indicator for the rest. The market, though, is often not that smart.
The market might still hold out hope for the September ETF approvals if the CBOE ETF is rejected. In which case, we might see some price support going into September (marked by the "Likely" red line). Yet if the market is behaving sane, and the CBOE ETF is rejected, then a sane market might assume the other ones are rejected too. In which case the market might behave rational and move down to 6k quickly (marked by "Unlikely" red line).
CONCLUSION
- Swing traders should sell at the 2nd leg (today) or the 3rd leg (in coming days/weeks) of this rally.
- When there is a pull-back from the 3rd leg of this rally, down into the 7,500 range. This is not a buying opportunity, unless the SEC approves the CBOE ETF. At which point this is a gamble, unless you have insight into the likelihood of approval. (If so, please tell me your reasoning.)
- Any sort of price support around the 7,500 range, is not a sign of support for a continued bull market. People who only read technical analysis might think this. Rather, it is a sign of "wait and see" concerning the CBOE ETF decision. If this support holds following the CBOE decision, then it is still just a "wait and see" situation concerning the other ETF's in September.
- A market disappointed by no ETF approvals, is likely to decline back down to some baseline of support. Very likely to test the 6k level to see if it holds.
... but keep in mind it may be approved, which would be great!
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by crypto-investor
