I wrote this one 8 Dec 2018, but because i wanted to add more things i kept it on hold in a hidden post. I just did not have the time to complete it, so i will post it as it is now and based on question/comments, i might make a part 2 on this post.
Every week i keep seeing this long term LOG chart and i simply just can't stand it anymore. I know most people think TA is about drawing some lines and we can simply trade based on those facts. In many cases that is very true, no doubt, it is just not that simple.
I have mentioned many times that i simply do not look back at the period before 2017. I am 100% convinced without a second of doubt, that this long term chart of Bitcoin' is as useless as they come. There is one very simple reason for my assumption, the market dynamic (the buyers and sellers) are completely different back than.
- The percentage of professional traders is so much more now than back in those days. - HODLing days are over, who still has the confidence to keep 100% of their portfolio in crypto. - Maybe the most important fact of all, it used to be buy and sell only, nowadays shorting has become a defining factor in this crypto world, do not underestimate this for a second. - Leveraged trading, is much more in 2018 than it was in the past.
Of course there are levels where certain early investors, who were smart enough to sell (at least part of their portfolio) during the highs, who might think; "what the heck, lets try a little bit again around 1.000/2.000/3.000 or whatever price they think might be worth the shot. Because they remember certain support levels were important to them back in those days. Current support levels are mostly created because buyers step in, but just as much levels where bears take profit on their shorts (which are also buy orders). Since we usually see shorts squeezes at certain levels, it is maybe even safe to say that the bears determine the support levels nowadays.
Just look at how many people kept adjusting trend lines the past months and referring to past support levels around in the 5K and 4K levels. But i think we have all seen what value these levels had the past month, absolutely nothing. They all cracked like it was nothing. Now i am not saying i knew it would go like this, i never expected it to get dumped so much so fast. But it was quite obvious that a break of the 6K would be very bad for the market since it was a huge support for 8 months.
Throughout 2018, how many times did we have breakouts on those descending trend lines from the 20K level (yellow circles). The only solid useful line i can see here, is the blue one. For the rest, what is the value of them? You need to look at them upfront, not in hindsight.
Crypto is a very young market which still has to mature. So it will take many more years to achieve that level. Only THEN can you think of giving real value to these long term trend lines . The best example is the break of a few weeks ago. Not matter if you were a bull or a bear, but the 6K support zone held as support for more than 8 months. Would you really try to buy long term based on that trend line? Or was it quite clear the bears had won the big fight and we would start to see a crash.
Now my message is not that it is pointless, there are enough (mature) assets where it does work, i just want to give the message, do not stare blindly at these long term trend lines . Maybe use them as an extra tool to confirm your analysis, but nothing more than that. I talk with several professional traders on a regularly basis, there is not even 1 of them that even mentions these trend lines .
To put it in more simple words, when looking at a chart (no matter which time frame) it's like one big story. And like each story it is divided in chapters. What i am trying to say is, do not mix up the different chapters. For example, the 6K triangle is a chapter, or the current possible triangle as a chapter as well. Many of you follow several analysts here, we all make good, decent and bad analysis, but i don't think i need to remind you what catastrophically bad predictions have been made based on these trend line .
I don't want to step on any toes, but i just had to get it of my chest, because it's not fair towards the less experienced traders :)
Previous educational post:
Another educational post, worth the read, makes you understand my message here better;
Don't forget to give a like if you appreciate this :)
Botje, I have to agree with you. Ever since the BTC futures market opened in December, thank you CME, the trends don't mean buttkiss.
All a whale needs to do is buy up $5 million of BTC which will pump the market and sucker in the amateur bulls who exclaim "We're going to the Moon Martha!". Then set up a leveraged futures short contract on BTC, say 2:1 or 5:1 etc, dump their BTC for a small loss then clean up in the futures because it is leveraged.
Rinse and repeat. Over and over again. No need to spend years studying TA or fundamentals. Any monkey with money can do it. This is of course criminal activity in the minds of most traders. The SEC won't crack down on it because they too are part of it. Don't believe me? The SEC has been letting JPM and other Wall Street firms fix the price of silver and gold for decades. The Rothschild's have been fixing the price of gold for over 100 years. The only way for the crypto market to be fair again, or at least partly fair, is for greater adoption that will flood the crypto market with so many buy orders that the whales won't have enough money to manipulate the price any more. For me, that day can't come soon enough.
botje11
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@BDG, Yes indeed, i remember back in Dec/Nov, when the futures were announced and everyone was celebrating, i kept saying it's maybe the worst thing that could happen to the market, because it will get manipulated even more. It is indeed too easy! Just look at that Wcex story from the July high at 8500, where a trader, on purpose went long with a pos too big for that broker (not enough volume to buy it up), than short it (or simultaneously) on another exchange where liquidity is better (prob Bitmex). Then simply let that big liq wall hang over the market. Every market gets manipulated, but not like this. I think the biggest step crypto could take, is combine the volume of all the exchanges, making it more difficult to manipulate the price
You are a Smart Trader. I find maximum analysis here trustless and piece of *** from 'fame sick' persons, except you. When I do my own research and analysis, i always conclude your study there in case of bitcoin. Keep going on bro.
botje11
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@Jhon_Dillinger, Thank you, that is a very nice compliment. I think the biggest difference might be that i always try to show an objective view of things, not trying to sell my view
Poukitoun
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I consider myself a newbie, I have been in crypto for a bit more than a year and I have never had any knowledge of trading but I can tell you already trendlines have been of no use to me whatsoever. I’ve been using moving averages and that has been so helpful in the last two months I simply can’t believe it, so much so that all the last trades I’ve made I’ve had close to 100% success rate. Always making conservative moves with only 5% of my portfolio though. I’ve stopped reading most ideas in TV or following any news, the charts tell you everything you need to know. If I had to pass on any knowledge to anyone I would say the key points are: Long term patience - never chase the price, let the price come to you - trade with no emotions - don’t be greedy, a profit is a profit - don’t hodl blindly - diversify your portfolio.
botje11
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@Poukitoun, the key word for succes in your comment is, conservative. Because when trading with a size you feel comfortable with, it’s the only way reach your key points acually. Good to hear you have been doing well :)
cjpritch88
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stop telling the normies that trend lines suck, that's supposed to be a secret
All a whale needs to do is buy up $5 million of BTC which will pump the market and sucker in the amateur bulls who exclaim "We're going to the Moon Martha!". Then set up a leveraged futures short contract on BTC, say 2:1 or 5:1 etc, dump their BTC for a small loss then clean up in the futures because it is leveraged.
Rinse and repeat. Over and over again. No need to spend years studying TA or fundamentals. Any monkey with money can do it. This is of course criminal activity in the minds of most traders. The SEC won't crack down on it because they too are part of it. Don't believe me? The SEC has been letting JPM and other Wall Street firms fix the price of silver and gold for decades. The Rothschild's have been fixing the price of gold for over 100 years. The only way for the crypto market to be fair again, or at least partly fair, is for greater adoption that will flood the crypto market with so many buy orders that the whales won't have enough money to manipulate the price any more. For me, that day can't come soon enough.