BTCUSD:Facing CME Volume And A Bearish Formation. 20K Anyway?

2017年12月18日

BTCUSD update: Minor retrace to the 18k level followed by a bullish pin bar off of a narrowing channel that points to an attempt at 20k. Now that both the CBOE and CME futures are in play, I anticipate more and more price noise in this market, and based on the current structure, a test of the psychological 20k level.

As far as levels goes, not much has changed except for the 20300 upper boundary of the reversal zone generated by the structure of the 18k retrace. This zone is narrow and is worth noting because of the psychological effect of the 20K level. Will price break it?

Based on the current bullish pin bar that is unfolding, price is likely to push through momentarily at least. Markets that intend to sell often reject major levels quickly, not form a pin bar within the lower boundary of a bullish trend line just under the resistance level.

With that being said, there is a conflicting structure than may lead to a much broader correction soon after the 20k test and that is the bearish pennant formation which is made clear by the converging trend lines. These formations have been appearing frequently in these markets only to see price go higher, but that does not mean they should be ignored when they appear.

As the trading day progresses, the CME futures volume should increase and have a stronger effect on the price action. Keep in mind futures contracts can easily be shorted which will compensate for the absence of selling that has been built into these markets thanks to regulation in the U.S. And if institutions decide to get short, they can afford to do it big, and with ease now that the CME offers a 5 coin contract compared to the one coiner over at the CBOE.

So price is at a psychological resistance, gyrating around 18974 which is a 2.618 target (written about in previous report) and in the process of building a bearish pennant formation. Even though the overall trend is still bullish, these conflicting signs say three things to me: A broader short term correction is more likely, if you are long, lock in some profit, and do not take any new long swing trades at these levels.

And as far as the alts, people keeping asking me what will happen if this market presents a more serious correction and the answer is: who knows. The relationship with the alts fluctuates wildly. One minute BTC sells while alts push dramatic new highs, and the next minute, they are all showing the similar price structures as they are at the moment. I don't rely on that relationship and instead evaluate the price action of each coin independently.

In summary, it will be interesting to see how the CME affects this market now that professionals and institutions can get into the game safely and with size. As far as my plan goes, I am patiently waiting for a reasonable retrace to a projected support which is at the 14500 area. IF price retests that support, I will then evaluate for a bullish reversal. Otherwise I have no reason to take any action at this time. If the market can't meet my criteria, then I can't take any risk because the market doesn't control me, I control myself. That is what a trading plan is all about.

Comments and questions welcome.

Quick announcement: Tomorrow I am going to appear live on NASDAQ's Twitter broadcast. They are going to interview me about the coins. I will post the link in tomorrow's report so keep an eye out for it.