BTC Update! Consolidation began... where to next?

22 déc. 2018

Jumping off yesterdays chart I was watching for consolidation to begin based on 4 hour chart starting to set up lower highs despite still holding higher lows at the time. There was some longer wicks taking place but bulls were also holding 12 EMA as support still. This was giving us an equilibrium pattern in which if a bull break I was expecting minimal follow through as consolidation was due so was planning to scale out if they did break bullish for remainder of position. I had tightened up my SL for a bear break and then once I saw ETH and LTC both break bearish first, I scaled out of my BTC position in $3900's just to avoid the fees from a stop loss down just under 3900s. At that point I was fairly confident we would break bearish so commented on yesterdays post.
Shortly after we saw the bear break with the big red candle on this chart around. So what next?

Sticking with 4 hour chart and this is still perfectly fine for the consolidation. Yes we have lost the higher lows and higher highs on 4 hour that had been in tact since the start of the bull move. In all its just under a 10% pullback from the high of this move to our low yesterday being $3775.
While the bulls lost the higher lows and the 12 EMA support, the fall to $3775 timed perfectly with our 26 EMA to offer support. Those not familiar, I use 12 and 26 EMAs on all my charts due to Coinbase using those as their defaults so they have more relevance. Overnight the bulls tried one small push back up to $3928 which coincidentally is exactly where I had personally exited for remainder of my profits yesterday. Hard to say if 12 EMA is now acting as resistance as that move did get the bulls briefly above it but candlestick closed below it. So $3928 is currently a potential lower high to be watching and $3775 the lower low to be watching on this 4 hour chart. Volume has significantly declined as well as both sides take a breather. So with 4 hour chart clearly losing its uptrend at least temporarily, we zoom out to the daily chart.

Daily chart seemed to want to hold its 26 EMA as support (remember the daily EMAs have not seen the bull cross like the 4 hour did). I do expect 26 EMA to lose support and want to see if 12 EMA can pick up to hold support on daily and give our daily its Higher Low. Daily chart needs to reverse trend here with a higher low compared to $3129 and then get a higher high compared to the $4175 we just set. 12 EMA would offer a strong chance of that if it could hold as our higher low but we need to patiently wait and see what kind of strength the bears have. If we have further pullback it just makes a higher high more challenging for the bulls due to the space they'd need to fill to get above. A higher low closer towards $3129 sets up more of a chance of an equilibrium on daily rather than going straight to a higher high. A higher low on daily closer towards $4175 gives bulls that stronger chance to get the higher high.
Again, all of this pullback is perfectly healthy across the board but as a trader, I prefer to lock in those profits, wait for the expected consolidation and then re-position myself again for another favorable trade. Red flags as always, increasing bear volume, 4 hour chart giving some consistent lower highs and lower lows. Watching today and tomorrow for our higher low on daily to ideally be set and would love to see that around $3600-3700. Could the $3775 from yesterday be the low of this pullback? Absolutely but in my opinion its unlikely to be. Lets see where this goes!

Just My 2 Sats!