Bitcoin Breakdown on Second Leg of a Wyckoff Distribution
Much like yesterday, my hope is that regardless of what Technical Analysis you use, either you were positioned short or sold at the top before the second leg down of the Wyckoff on the never-ending quest for the low end of the trade range at $8,120.
Looking at the Intraday chart, the Low Pole Reversal first hit the 50% reversal target of $9,440 before pushing higher, flirted with $9,540 resistance, then pushed higher and fell short at the $9,600 resistance line. Once the price started to move north of the 50% reversal target in Point and Figure, that is a signal for those in a short position to sell or jump into a scalp long.
For the formation to move into a bullish breakout at that stage, the price needed to advance to $9,860 on the Low Pole Reversal (Double Top at $9,820, Double Top Breakout at $9,840, and confirmation at $9,860). The price target on that bullish breakout would have been $10,300 which conveniently coincides with the next major resistance level above the trade range, and ultimately where I believe an Upward Thrust After Distribution (UTAD) will top out at as the Wycoff Distribution Phase continues.
Instead, the formation moved lower through a second leg of Wyckoff Distribution. Yesterday I mentioned in a comment in the subreddit r/Bitcoinmarkets I took a short position at $9,540. The rationale was it was very close to a local support level, which was also reasonably close to the recent high from the Low Pole Reversal, a bearish bias was in play on the Intraday, and the R/R favored a short in that range.
Once the formation moved down to $9,300 after the Low Pole Reversal, a Double Bottom was signaled (which is bearish in Point and Figure). The target price for the move should have been $8,300 [$9,800 - ((($9,800 - $9,300)*3)*2/3)]. However, the PA stopped again after advancing 3 boxes, preventing a Low Pole formation from coming into play a second time, and kept the price above the psychologically important $9,200 support line.
One thing to remember during a Wyckoff Distribution Phase is it never ends with a single candle down. The Composite Man is looking to unload their bags at the highest possible price to prevent price slippage.
Looking at the higher time frame (1D) we can see the recent PA has pushed the low of the recent red candle down to $9,220, or about $20 above the $9,200 support line. The Parabolic SAR is still signaling bullish currently with a suggested buy of $8,179.
The signals on the 1D all reflect bullish sentiment, and if you recall in my write up yesterday, I felt there was still a bearish bias. On a macro level that has not changed. However (and somewhat ironically), I would imagine we will revisit the $9,540 - $9,600 level before resuming the distribution downward towards test the lower end of the trading range ($8,120) to establish a Sign of Weakness (SOW) somewhere between $8,120 and $7,700.
Always remember this is not trading advice.
Outside of that, Happy Trading.
Looking at the Intraday chart, the Low Pole Reversal first hit the 50% reversal target of $9,440 before pushing higher, flirted with $9,540 resistance, then pushed higher and fell short at the $9,600 resistance line. Once the price started to move north of the 50% reversal target in Point and Figure, that is a signal for those in a short position to sell or jump into a scalp long.
For the formation to move into a bullish breakout at that stage, the price needed to advance to $9,860 on the Low Pole Reversal (Double Top at $9,820, Double Top Breakout at $9,840, and confirmation at $9,860). The price target on that bullish breakout would have been $10,300 which conveniently coincides with the next major resistance level above the trade range, and ultimately where I believe an Upward Thrust After Distribution (UTAD) will top out at as the Wycoff Distribution Phase continues.
Instead, the formation moved lower through a second leg of Wyckoff Distribution. Yesterday I mentioned in a comment in the subreddit r/Bitcoinmarkets I took a short position at $9,540. The rationale was it was very close to a local support level, which was also reasonably close to the recent high from the Low Pole Reversal, a bearish bias was in play on the Intraday, and the R/R favored a short in that range.
Once the formation moved down to $9,300 after the Low Pole Reversal, a Double Bottom was signaled (which is bearish in Point and Figure). The target price for the move should have been $8,300 [$9,800 - ((($9,800 - $9,300)*3)*2/3)]. However, the PA stopped again after advancing 3 boxes, preventing a Low Pole formation from coming into play a second time, and kept the price above the psychologically important $9,200 support line.
One thing to remember during a Wyckoff Distribution Phase is it never ends with a single candle down. The Composite Man is looking to unload their bags at the highest possible price to prevent price slippage.
Looking at the higher time frame (1D) we can see the recent PA has pushed the low of the recent red candle down to $9,220, or about $20 above the $9,200 support line. The Parabolic SAR is still signaling bullish currently with a suggested buy of $8,179.
The signals on the 1D all reflect bullish sentiment, and if you recall in my write up yesterday, I felt there was still a bearish bias. On a macro level that has not changed. However (and somewhat ironically), I would imagine we will revisit the $9,540 - $9,600 level before resuming the distribution downward towards test the lower end of the trading range ($8,120) to establish a Sign of Weakness (SOW) somewhere between $8,120 and $7,700.
Always remember this is not trading advice.
Outside of that, Happy Trading.
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Aviso legal
As informações e publicações não devem ser e não constituem conselhos ou recomendações financeiras, de investimento, de negociação ou de qualquer outro tipo, fornecidas ou endossadas pela TradingView. Leia mais em Termos de uso.