BTC/USD 20th Feb 2018 04.00 UTC Chart Analysis

After breaking it's recent top of $10,860 shortly after the previous Cryptonym post, BTC/USD continued onward to test $11,000 before topping at $11,250 in the early hours of the 18th. Thus the recommended plays in the previous post (small - medium size buy if breaks near term resistance of $10,860 with exit level of $11,000 and small - medium size buy if breaks resistance level of $11,000 with eye on level 2 action for resistance and exit) would both have yielded modest gains (fig.1):

Given this small victory for the bulls after a dire opening to 2018, the question on every investor and trader's lips is whether or not a true reversal in fortune is likely to materialise, with the most optimistic hoping for another parabolic run to test December 2017's all time highs of around $20,000. Unfortunately, the longer term chart assessed through the lens of an older, more protracted (and maybe wiser!) memory may spell more bad news for the perpetually bullish (fig.2):

Scrutiny of the two major peaks in the one day chart spanning the last year shows two summits, with the second being of smaller amplitude than the first ($19,891 and $17,252 respectively). Connecting these two points and extrapolating a trend line ('extrapolating' being the proper term here, since a genuine trend requires three points to be established) indicates that BTC is now nearing it's third peak after which it may continue to trade in the bearish channel that abruptly precipitated from the dark chasm that is known as December 17th 2017, when the currency hit it's all time high and was simultaneously sabotaged by it's own success and the opening of the futures market. If this extrapolated trend line is adhered to, we may see a third top bouncing off the trend line around $11,500 (fig.3):

Indeed, the coming days may turn out to be a true crucible for the currency, at least in the short term, since they are likely to determine whether or not the bearish channel of lower highs that has developed since December is set or not. If the price action fails to break the $11,500 level convincingly, it will have nowhere to go in the near future but down, at least to the next support levels within the recent trading range, which sit at the high and low $10,000 territories and going further back to before the dip to $6000, around $9499. Even if the price manages to break through it's current resistance and violates this emerging bearish channel trend, the next peak could still be a significantly lower high than the January 6th top of $17,252. Given the sheer speed of the recent explosion out from $6,000, breaking the next relevant resistance levels of $12,190 and $13,017 (fig.4) seems unlikely, at least without almost inconceivably good news and a collective amnesia of the fear, uncertainty and doubt that has been heaped on cryptocurrencies in the recent months. This having been said, the mania that characterises the crypto market should never be underestimated and contingencies in any given scenario, even those that would dumbfound cool headed analysis, should be kept in mind by all thinking of jumping in to the investing or trading space.

Potential Plays:
Buy now

• Motivation: clear breakout over extrapolated trend line on high volume
• Likelihood: unlikely
• Current likely outcome: loss
• Action: avoid

Short now

• Motivation: possible failure to break extrapolated trend line
• Likelihood: possible/likely
• Current likely outcome: gain
• Action: seek
• Position size: small/medium
• Entry: Under $11,500
• Exit: $11,000 zone (conservative) or further to $10,860, $10,271 or $9499
• Risk/Stop levels: $11,529 (best) $12,190 or $13,017

Buy later

• Motivation: breakout past current extrapolated tend line resistance on high volume
• Likelihood: unclear
• Current likely outcome: potential gain
• Action: consider if materialises
• Position size: small
• Entry: over $11,529 minimum
• Exit: $12,000. Watch level 2
• Risk/Stop levels: $11,000 or $10,860

Short later

• Motivation: fails to break current peaks around $11,500 and breaks previous support
• Likelihood: unclear
• Current likely outcome: potential gain
• Action: consider if materialises
• Position size: medium/large
• Entry: $9499
• Exit: Unknown
• Risk/Stop levels: $10,000 or $10,271

Cryptonym.

NB.
Values in USD are representative of prices traded on the Bitfinex exchange.
Times are UTC standard.
This does not constitute official investment or trading advice. Your losses are your own.

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