BTC Analysis, All in one.
מעודכן
Description
Hello, how are you? Because you are somewhat stressed by the current situation of Bitcoin, it is understandable, do not worry. I introduce myself. I am Sofí the owner of this TradingView account, we are currently going through the classic correction after a rather gigantic Bullish stage.
First of all, tell you that everything here is well founded, and nothing is taken out of nowhere.
First of all, let's see some history.
BTC started its upward path as of March 11, 2020, From 4K USD to the Current price, in an incredible way Bitcoin in that process had a growth of 1200%. Until April 12, 2021. Where a drop that currently takes 45% began. Taking into account only the closing price, in Graph Line. This is explained in our free guide here on TradingView.
1200% Rise.
-45%
Taking this into account, what happened this year? What makes it different?
This year some relevant things have happened, for example, the growth boom in the adoption of cryptocurrencies in society, important people entering the market, new ecosystems appearing. Among many good things to highlight. But everything good has its negative side. For example, people who misinform about the technical analysis in social networks giving invalid analysis, Exchange disappearing out of nowhere, Many losing money due to the misuse of cryptocurrencies, Strong criticism of BTC that generates doubts if it can really be adopted or not.
The reality is that many cryptocurrencies have more value given by people than by the project itself. And this does not happen only with cryptocurrencies called "Shitcoins" but also with solid projects.
The concept of cryptocurrencies is that the current value is given by people, but a certain value is not supported by the achievements of that cryptoactive.
Data
Many will criticize me for what I will say, others will hate me, but it has its logical part, and no one will deny it, many bought BTC above 10k. Thinking it would keep going up, including people who bought at 64k. And they bought back in the falls, which are currently in losses, for not being informed, for believing that it would continue to rise, the reality is that the largest purchase of BTC happened at 10k levels. Hence the growth of this was done by retailers. Do you really think that the institutional bought at 30k-64k? No. Most of his acquired BTC was in 10k. And I will show you with simple statistics. Giving proof that the rest of the value of BTC was put by Buybacks made by institutional, whales and retailers, but on a smaller scale. The reality is that Bitcoin obtained an inflated value, this is due to the growth that it had in itself, the pandemic that some looked for ways to generate money, among other things to highlight, also the issue of economic crisis that I have spoken here in tradingview we have quite a long thread explaining everything. Knowing this, you will understand that most of the value of BTC is inflated. The Bitcoin proposal is incredible. But its current achievements don't underpin all the growth to 64k. This is where theories such as Wyckoff or Eliot that we will talk about in another moment are born, where they inflate the value to obviously suffer a setback to its real value from investors who really informed themselves and did not enter with the purpose of becoming millionaires as many entered this world. Or will you tell me that you took the time to do your research before investing? Most people only bought, to buy. And it is a reality. Now the market has to get those people out. And it is what has happened in all cycles, Euphoria for growth, massive purchases by uninformed people and when they see the fall, they sell and accuse the cryptocurrency of a bubble. Yes, of course, it is inflated, as are too many assets in different areas, but serious investors know that in the long term it will always go well.
Bitcoin has no true value to support that 64k USDT. Beyond the euphoria generated, since the first cryptocurrency city does not yet exist, we only have a small adoption in society. The Bitcoin market in society does not exist yet. This is just the beginning, we are betting on a promise, a promise not yet fulfilled. And that is the reality. But this promise is giving incredible returns to well-informed people, and who believe that the promise of living a world where the economy is not managed by the government, that transactions are fast, a world of digital economy, of access for all . We have had several achievements this year, we still do not get the whole society to know this world, and that is why that value is not yet endorsed, but imagine that without the need for society to know it, we reach a fairly high value, imagine what that you can get Bitcoin in the long run, if the promise comes true, if the world adapts this technology to its daily life. The projection you can give yourself is simply incredible.
You can take TESLA as a base, TESLA has value because it is the promise of the company that possibly takes us outside of our planet, but the reality is that its market in society does not yet exist. It is still just a promise. Keep it real. We all want Bitcoin and our investments go up, but something nice when it comes to investing simply in the fundamentals is managing your risk, hope for the best, but always be prepared for the worst.
Already making this reflection, I invite you to read my Post regarding the economic crisis, so that you understand what is happening not only in Bitcoin. If not the economy in general.
Understanding this, you will understand what I want to get to, what happened in this fall has happened 3 times in the past. And what is happening now, Bitcoin happened in the crisis of 2008. You have already changed your idea, you have the desire to inform yourself and invest in the long term, you understand that you are not at a loss, you simply invested by fomo, or perhaps you are one of the people who He invested in becoming true information before doing so. Either way, let's move on.
Technical Analysis and some Statistics. [/ b]
Many traders on YouTube, on other platforms perform short-term analysis, I do not criticize them, really many do it great, but in reality in general many have failed their analysis because many traders only view and study courses or people who are not really informed As extensive as the technical analysis is, Few know that it is Backtesting, Order Flow, Volume Profile or simple Heikin Ashi. Which are tools and forms that help a lot to give yourself a better performance when it comes to analyzing and realizing that cryptocurrencies is the worst market to trade.
Let's start. When and why did the fall begin?
The fall began on April 12, 2021. This day several things happened to highlight. First of all, the first Bitcoin Panic happened. Many were afraid that it might happen at this point. Because the bull channel was weakening and there were a number of ways to see a possible drop in Bitcoin. Let's go see them.
1- Let's go to this date. First way to see it. Bullish channel weakness.
Here we draw a parallel channel with an uptrend. You can find the tool in the Trend Line section. We can see that, these days, BTC was not having enough strength and was testing the bottom of the channel repeatedly, which was quite negative for it. Since it meant that there was no buying force and the sell had clear resistances, finally breaking down on April 18, 2021. Out of the bullish channel. Many returned to chart another way to see the bullish channel. But the reality is that in graph 1d. It had already been broken. This channel is created since December 11, 2020.
2- Ascending Wedge Pattern.
As always in these times BTC had some exaggerated shadows that currently magically disappeared, so for patterns I personally prefer to use Lines since it is much more efficient in these areas. If we use Lines we can see the Ascending Wedge more clearly, which is a pattern that can mean loss of strength of the current trend. If you see it, you can't break it. You can generate Fake V (False Breakouts in a V shape that will return to within the pattern, in this case the false break that I try to return to the trend.
Here you can see the Fake V, trying to get back to the bull channel, which sadly was not achieved. At this point it was already known that cruel times were coming for the cryptocurrency market, how? Simple in CFTC Report (Community of Stock Market Futures Traders) a quantity of 300 Shorts had appeared in just 1 week. Giving signs that the institutional ones were betting lower on #Bitcoin. It was already perfect time, to Open Shorts. And go along with what they expected.
3- Pattern M [/ b]
The M Pattern is a Bearish Pattern, there are 3 that are general, then others invented by other authors, this is an Extended M, This type of pattern is usually confirmed with statistics or with the theory of forbidden to exceed the maximum peak, taking input the Maximum Peak, Average Peak, OR after a Pullback, these three inputs are totally true, although it is always recommended to verify it using the ARMA, ARIMA method from statistics or econometrics, as you decide to call it. But it could be called as the Mathematical and Algorithmic part of Trading. We can also use the OB and MB to verify it, in this case I only base myself on the view of MACD, RSI and Volume Profile. It gave no indication of returning to the upside and did not break the no-peak rule. So enter. in the 59k zone. Short.
We could also see a Short M Pattern, but actually, I don't take it into account due to the empty area that I place with the arrow.
4- Mini-Shoulder Head Shoulder
This would be to rule out the previous fall and visualize the next one as of May 16. The idea of an HS could be started. (HCH = Shoulder Head Shoulder), the volumes, OB and MB were perfect. As well as we could have the idea of a mega HS. That would confirm the theory of setback at 0.786 of each cycle, which I will explain later.
5- ABCD Harmonic Pattern
Although it does not meet the levels perfectly, it is within the range of 0.618 to 0.786 and 1.27-1.618 so it could be considered a bearish ABCD harmonic pattern. That was perfectly accomplished, resulting in a decline towards current levels. Another way.
Classic RSI & MACD Indicators
1- MACD
This is where what I said comes from, "The biggest purchases appeared at 10k-20k. As we can see even though the price continued to rise, a Bearish divergence is clearly seen in the MACD indicator, Let me explain what was happening and nobody saw MACD has values that indicate the strength of both the supply and demand of any asset according to its price action. Quite useful in general. But let me tell you that this decline was seen to come a long time ago.
Correction
As we can denote the MACD since Feb 21, the MACD obtained values of 5153 in the Long Moving Average (Blue). And so on, the Short (Orange) moving average also obtained high values. But from there, despite the fact that the #BTC price continued to rise, a clear bearish divergence could be seen, until we touched low levels compared to 5153 which meant that the demand for purchase was decreasing, this was already a bad sign and as of April 13 we see the loss of strength, for April 18 to break down and on April 24 to reach 0 values in the indicator then we had the Fake V trying to return to the trend, but in the indicator we could not return at high values returning down to the present where we have values of -4605. This is the first time that #BTC obtains values in the indicator that are so negative. The values in the MACD is a way of being able to see the development, not everything is based on the Cruze of moving averages. Extensive topic. But I would like to one day play it with our programming team to explain it
If we changed to just looking at the BTC graph, everything seems to continue to rise until it touches those low levels of MACD compared to its beginnings where it began to put something lateral.
Bullish:
Bearish:
2- RSI [/ b]
The RSI indicator is similar, with the difference that it has parameters that limit it to Over-Buy & Over-Sell zones, as we can see it is similar to MACD with bearish divergence and we are touching the oversold levels, before apply the rule that all the traders you buy in Over-Sell tell you, I want you to review all the analysis. First.
3- Echocastic
I do not like using this indicator very much, but some use it and I will summarize it to my personal opinion, Ecocastico in natural configuration only shows overbought and oversold zones, it does not present divergences, it only prioritizes it, looking for the person to enter long or Short at this point, the negative is that by not presenting divergences, many people tend to enter areas of long overselling or short overselling without knowing that these levels can be maintained for days, weeks or months. In a Market change. (Bearish Market). Since the level remains the same, but the value of the asset continues to fall. If you use this indicator, you must have another one as a complement, to be able to prevent a possible fall by not seeing any bearish divergence in it, but in relative terms it is quite good if you master it, for this it is always recommended to perform Backtesting.
SEEING seen several ways that anyone could prevent the fall, do not blame the market for your losses, actually it was coming, you can see our idea raised months ago here.
The analysis was uploaded in the English community. So I apologize if it is not found.
Now, well, we already started the fall, what awaits us?
Well let me answer you in the next part.
Market theories
1- Eliot's theory
According to Eliot the market is based on Ondas.
1.1- Impulse Waves:
In this case, I already tried to place the first Wave from 4k USDT which is where I started to rise, but it does not meet the rule that wave 2 must reach levels of 0.618 minimum. Fib in Retracement, so I discard it and we place from 23k. Up to 40k the first Wave. Where if this rule is validated.
By doing this, the rule is fulfilled. To measure a retracement, the maximum peak must be 0%. This is a basic rule of correct use of Fibonacci, sadly it does not let you place the Fibonacci tool directly gives you Fibonacci retracement, but with some configuration and use you get it.
1.1.1- Wave 1-2 Rules:
Wave 1 - Usually appears after a 0.5 retracement at the Fibonacci level. (Discarded) This rule is not totally necessary.
Wave 2 - Usually the 0.618 retracement minimum. up to a high of 0.786 Fibonacci Retracement of Wave 1.
Applying the rules:
As we can see we touch 0.618 which is the minimum.
Accomplished.
1.1.2- Wave 3-4 Rules:
Wave 3- It is usually a Fibonacci projection of Wave 2 minimum of 1.618 this wave is usually the longest, although not necessarily. The only requirement is that it is not the smallest. This is put into the Eliot Theory book in English. If I remember the name I will leave them in the comments. Projection you can use the same retracement by setting the maximum peak 100% or the Fib spread. To your liking
Wave 4 - It is usually the retracement of Wave 3, being valid if it tests minimum levels of '0.23 and maximum 0.382. Fibonacci Retracement.
Applying the rules:
Wave 3: If we use Retracement to carry out the projection, we can see that the 1.618 level is easily exceeded, this projection being set from Wave 2.
Wave 4: 0.382 Maximum retracement, Fulfilled.
1.1.3- Finally Rules of Wave 5:
Wave 5: This is a projection made from Wave 4 seeking to hit the minimum again at 1.618. Even much more. In this case I am forced to switch to Candles, since Line does not comply with it exactly.
1.1.4- Using Fib Extension for Wave 3 and 5.
Some do not want to use Retracement in these cases and prefer to use the Fib Extension for searching. In this case the accuracy is a little better. But on Wave 5, he ends up invalidating it.
Wave 3:
Wave 5:
1.2- ABC Correction of Impulse.
1.2.1- Wave A: It is usually above Wave 4 of Impulse Waves.
1.2.2- Wave B: It is usually the corrective of Wave A, being less than 75%.
1.2.3- Wave C: Same length as wave A, 150% -161.8% of wave B or 261.8% of wave b in extreme case.
In this case it is fulfilled, With Projection using Retracement, but it is time to use Extensions and see. Also in this case.
1.2.4- Using Fib Extension.
It would lead us to test 21k USDT. In the Extreme case.
Actually, although many like Eliot's theory in this case it is not perfectly fulfilled so I am not taking it as the main idea.
2- Wyckoff theory
Have you ever wondered how institutional investors manage their positions? What do they continue to do now and what will they do in the future? Tracking and tracking the whales is critical to making a profit in the markets - such investors are the overriding force behind every trend, and you'll be crushed if you get in their way.
Richard Wyckoff dedicated his story to learning about the trades of these investors. Its trading procedure is based on the investigation of market cycles, the interpretation of volume and the equality between supply and demand, the only indications that these institutional investors leave on the chart.
He has been one of the pioneers of technical study in the early 20th century. Wyckoff was described as one of the TA Titans along with Gann and Elliot. He was an avid student of the markets and an active trader. Early in his career, he identified the business of the legendary occupational operators of his time: J.P Morgan and Jesse Livermore. He closely inspected how they developed and maintained their tactics. All of the above helped Wyckoff develop techniques to assess the future direction of the market by analyzing cost action and volume on the charts.
As Wyckoff mentioned, small retailers are constantly losing a huge amount of millions of dollars to institutional entities. He dedicated himself to educating the public about how these giant investors operate and wrote several books on this matter.
Even though several of the techniques used by such investors during the 20th century are now illegal, Wyckoff's methodology for assessing the future direction of the market is still quite important.
Wyckoff reached the conclusion that the market action is a constant repetition of the same 4 stages: accumulation, margin, distribution and reduction. All these 4 stages happen directly thanks to the manipulation techniques of the “smart money” market.
The accumulation stage is generated in the graph as a narrow trading range in which institutional operators absorb the majority of the available supply of occupations.
Then, since the available supply is quite low, the demand increases, which produces a deep margin shift.
When cost and demand reach their highest point, institutional operators begin to lower their supply little by little, covering all the demand and building a tight distribution range.
Since each of the occupations remains in the hands of retail traders and there is no buying interest by institutional traders, the cost inevitably falls building a markdown stage on the chart.
To make the greatest profit in the markets, a trader should look at and understand how such institutional investors operate and follow his lead.
The composite man
The Composite Man is just a fiction. It is the addition of occupations of various skilled traders that occur simultaneously.
The composite human carefully plans and does his operations. He is interested in retailers to buy an asset in which he has already accumulated a position by doing many transactions, both buying and trading, thereby building high volume and advertising the asset as is.
Wyckoff and his students believed that if one could understand the activities of the Composite human being, he could discover many business and investment opportunities and profit from them.
So how do we apply this criterion to our business tactic? As you constantly study the cost and volume shift on the chart, take a step back and ask yourself the following questions:
What is the reason for the composite human being?
What is he doing right now? Accumulating, distributing or lowering or raising the price mark?
How do you earn money? Who loses thanks to the occupations of the Composite human being?
If I were the Composite human, what could my next step be?
Don't worry if you can't answer quickly - these questions are very complicated and require in-depth study. It is a job of the compound human being to cover their tracks: the less the population understands their motives, the more money they earn.
Fortunately, even though the activities of the Composite human being are stealthy, they remain traces throughout the graph and it is convenient for us to find and interpret them correctly. However antecedent to delve into technical research and graphics, we must understand the 3 main principles that are behind each cost shift; the so-called "Wyckoff laws"
Wyckoff's 3 Primordial Laws
Wyckoff's tactic is based on 3 primary laws, which help to detect the superior markets to trade, identify the bias of the future direction of costs, dictate when an asset is ready to exit a trading range and project ends of costs based on the conduct of the asset in its negotiation. distance. These principles are basic and have to be fully understood antecedent to follow.
The Law Of Supply And Demand
The first start is simple: once the demand is greater than the supply, the cost increases and once the supply is greater than the demand, the cost falls. Constantly that the Composite human being gets a significant part of the available supply, the supply / demand equality changes and the cost, naturally, begins to rise. If the Composite human releases his previously accumulated occupations, he shifts the balance back and the cost marks down.
A trading range (accumulation or distribution) symbolizes an equilibrium of supply and demand; assumes that there are 2 strong regions: a demand (support) region and a supply (resistance) region located side by side. The cost often oscillates between those 2 levels, while occupations change hands, whether it is from retail traders to composite man (accumulation) or from composite human being to retail traders (distribution).
To understand whether today's trading range represents accumulation or distribution, students in the Wyckoff procedure analyze the interaction between cost and volume and look for special events.
The law of effort versus Result
Volume is effort and cost change is the result. An effort is necessary to promote cost, whether it is increasing sales volume to minimize cost or increasing purchase volume to increase cost. If volume expands in the same direction as cost, it is a reliable trend continuation signal.
However, if there was a great effort to promote maximum (or lowest) cost and it did not result in a proportional cost change, then something is fishy. This behavior is called Cost and Volume Divergence, and it gives early guidelines for probable trend reversals.
This cost and volume study not only works in range markets, it also helps to identify directional biases throughout a trading range. If throughout a range, the purchase volume peaks do not move the cost much higher, it assumes that there is still a lot of supply and it is unlikely that the cost will rise until all the supply is absorbed. The same beginning applies to the opposite scenario: if over a range a high volume of sales does not result in a deep downward shift, it assumes that there is a lot of demand, the Composite human being is potentially increasing his position in the degree of today.
The Law Of Cause And Impact
This law is related to the beginning of supply and demand. Before any impact there should be a cause. And this impact will be proportional to the size of its cause. Accumulation and distribution are periods of creation of the cause. So the next markup or downgrade is the direct impact of this motif.
The cost cannot rise without a preliminary absorption of the supply and it cannot discharge without covering the majority of the demand. The longest accumulation (or distribution) involves the Composite human having acquired (or distributed) a majority of accessible occupations. Therefore, the next shift is going to be much deeper, as it requires a lot of liquidity to completely exit your position.
Analysis of trade ranges
The primary goal of Wyckoff's analysis is to enter the market at the right time, anticipating moves in the right direction, minimizing risk exposure, and increasing potential gains.
All of this is done by analyzing the trading ranges and identifying whether the current range is an accumulation or a distribution.
Wyckoff's method provides guidelines for determining events that occur in the trading range, helping to identify future directional bias. These events are shown in the famous schematics, created by Wyckoff and his students.
1- The trading range is divided into stages, and each stage comes with a group of events that define it. (Accumulation).
Stage A represents the outcome of the previous downtrend (of at least one intermediate). There are 4 events associated with it:
- PS (preliminary support) is a degree of support in which the increase in demand signals a viable end of the downgrade. Generally, it has pre-eminent volume over average and a wider candlestick spread.
- SC (sales climax) is a point at which the marketing pressure reaches its climax, and where the composite human being shows his first interest in marketing activities, immediately buying the panic of the retailers.
- AR (automatic rally) is a rally that is generated due to the cessation of marketing pressure. This rally should have a wider margin than previous ones to ensure that the previous sell-off was a climax. If that happens, the conjunction of SC and AR creates an estimate of the trading range parameters. There should be support close to SC and resistance close to AR.
- ST (secondary test): cost returns to SC levels to review the strength of demand in this area. To confirm a trading range that must remain in this area, any separation from the SC area must be an immediate high-volume return in the trading range.
Stage B builds "a cause" for the new trend. This stage represents a slow accumulation of activities in anticipation of the uptrend. The composite human creates a high enough demand in the lower part of the range and pushes the cost down in the preeminent part of the range. This process can take a long time, depending on the Composite Man's ability to control cost. This stage can integrate some novel tests of the lows (ST) and numerous novel tests of the highs (AR). Keep in mind that these novel tests have the potential to go out of the trading range to interfere with bankrupt retailers, yet the composition remains intact as long as the cost immediately returns to the trading range.
To further confirm that you are currently in Stage B, look at the volume. At the beginning of Stage B, the swings tend to have a maximum volume, which falls more and more as the consolidation continues.
Stage C is where the Composite human verifies if an asset is ready to go by demonstrating the remaining supply. There are 2 primary events:
Spring (jolt): a drop in cost that takes you below the lows of the trading range (below the ST or even the trading climax, depending on how deep it was). In most cases, it is the last attempt of the Composite people to obtain low-cost occupations prior to the margin shift. The build-up of marketing pressure forces retailers to think that today's trading range will culminate in the displacement of markdowns and will exit or reverse their positions. The Composite Man waits for separation to produce sufficient liquidity and then immediately covers all available supply, causing the cost to return to the trading range.
- Testing: a tiny pullback to check if there is enough support at the bottom of the trading range after a reorganization. The composite human stops his buying pressure and checks if the market has enough demand not to allow the cost to fall below the trading range. If it is this way, the market is ready for margin shift. If not, the Composite human continues to accumulate the available supply.
Stage D - Make sure we are right with our previous study. If we correctly interpret the spring and previous tests as bullish signals, then demand should prevail over supply and cost should gradually rise to the TR highs. Stage D has 3 events:
- LPS (last fulcrum) is the attitude after a test rally. Generally, it retests previous levels that were considered resistance. These attitudes are usually quite slow and do not have volume.
- SOS (Sign of Strength) is a rally with a volume notably preeminent to the common and with a more extensive cost differential than the candles. Mainly take the cost above AR.
- BU (Back up): short-term attitude to SOS, slight profit taking by Centimeters (demand test) and new test of the maximums of the trading range. It is the last chance to get on the bull rail.
Example en BTC:
2- Distribution Range.
Working in a similar way to the accumulation trading range, the distribution range is characterized by several phases:
Phase A of the distribution range marks the end of the previous marking movement. It mimics phase A of the accumulation range, but with preliminary supply (PSY) instead of preliminary support and buying climax (BC) instead of selling climax. AR and ST work in exactly the same way as they do during a build-up phase, but in this case AR is driven by a lack of demand after the rally and ST is a retest of the previous highs, not the lows.
Phase B is the consolidation phase. Usually there are several new tests of the highs and lows of the trading range. These movements are usually there because of the constant struggle between supply and demand: the Composite Man tries to get rid of all his stocks without scaring the public of his asset, he wants to get rid of his entire position with minimal slippage, so he needs to Hold demand at high levels, causing the price to rise and recover from the liquidity provided by emerging operators.
There are several events that occur during Phase B:
SOW (Sign of Weakness) is the first major settlement after the auto rally. It usually breaks the lower part of the trading range, which shows a change of character in the trend. Indicates that the offer became dominant. The move to the downside should be in above-average volume and a wider candlestick margin.
UT (Upthrust) is the opposite of Spring - it is a quick move above the trading range (usually at low volume). It is there to test demand levels and gain additional liquidity from bankrupt traders. Often these are levels at which the composite man initiates his short positions.
Phase C is the phase where the CM makes the last attempt to shake up the retailers before the markdown phase. It is your last chance to sell the remaining shares and / or open short positions at the best prices. The main event during this phase is the UTAD (Upthrust After Distribution), which is the same as a UT, but is generally much more volatile. Note that this event is not required, just like Spring is during a rollup; the presence of this event depends on many factors, including fundamental events and the availability of excess demand.
Phase D is where the price finally breaks the bottom of the trading range. At this point, it is obvious to everyone that the supply is dominant and that the previous uptrend is totally exhausted. There are recent unsuccessful attempts to increase the price, which generally have low volume and low spread. The events in this phase are: LPSY (Last Supply Point) and SoW (Sign of Weakness).
All right, let's imagine that he has seen Phase A in action. There was a strong sell-off on the volume increase and an immediate Auto Rally. When is it safe and profitable to look for shorts? What price action events confirm that the trend is about to turn?
An aggressive trader could spot the change in character and the first signs of weakness from the demand side and enter a short position at the first UT or UTAD in Phase B. It is a solid move from a risk / reward perspective, If a trader detects clear signals that the trend is exhausted, he can potentially enter the best possible prices. But the Composite Man is patient and will likely push the price up to UT levels at least several times. By shorting UT / UTAD, the trader takes a low-risk trade from a price perspective, but potentially locks his funds in the trade for a long time.
The safest approach is to wait for the SOW in Phase D and enter LPSY. Sure, in this case, the trader risks the price returning to the highs of the trading range, but even if this happens, he can quickly cut losses from it and enter the next signs of weakness.
Let's go through all the steps that should be part of the thought process of the trader who wants to apply Wyckoff's principles in his own trading strategy.
Example in BTC:
Wyckoff's theory is the most successful so far in BTC. And it is the one that I am basing myself on since it agrees with an idea that I have long ago.
Personal Theory.
Every so often after all the euphoria, there must come the Bearish, Classic Corrections, that no matter how much euphoria there is, they must happen. To form this theory we will use Fibonacci Retracement. Volume Profile. And simple logic. Next to the PiCycle Top indicator.
Let's First Explain What is PiCycle Top?
PiCycle top is an indicator that has existed for years that has managed to hit 3 maximum peaks of BTC. And with this year the fourth.
Its function is basic, a long moving average of 350 multiplied X2. between a short moving average of 111. When there is a Cross between these, it can be indicated that the Cycle has come to an end, or start a Double Cycle. Both options are valid. Already knowing this.
Let's build on history.
First Top Cycle.
Nov 14, 2011 to April 08, 2013.
We can notice in this perfectly that if we take into account the shadows it always usually touches 0.618-0.786 in Fibonacci Retracement. Even if it is in the shade.
Adding that if we add Fixed Volume Profile term. There is always a good 3-6 support zone and rarely 8. Volumes above the highest demand.
Adding that in this case, when testing the 50-period moving average, a double cycle began.
In this case the support is at 0.786, Test 50 Period Moving Average (EMA) on Weekly chart. And Its support is 4 volumes above the most demanded zone.
Second Top Cycle.
Jul 01, 2013 - Nov 25, 2013.
We can see a Double Cycle in the same year, this being a growth of 1181%. And finding support at the 0.786 Fib retracement level.
Being 3 times above the most demanded volume. Your support. At 0.786.
And returning to the upside in the testing of the 200 Period Moving Average (Weekly Graph).
Third Top Cycle.
Jun 15, 2015 - Dec 11, 2017.
This cycle has been the most ridiculous in which BTC had a gigantic growth, being a growth greater than 5000%. And in this cycle history repeats itself.
0.786 most demanded support. And it returns to the upside when testing the 200 Period moving average on the Weekly chart. and finding support again 4 volumes above the most demanded area.
Four Cycle, Actuality.
Based on this repetition, our support would be testing the 200-period moving average, we have 2 points to take into account as a difference.
1- We have an economic crisis with a pandemic in full swing, which can break this pattern further downward.
2- We have more attention from different investors that could make the current 0.5 Fib zone the zone to return to the upside.
Ignoring these two points and just relying on theory. Our most demanded support would be at 4 volumes above the highest demand zone, up to a maximum of 8.
We would be looking to test the 200-period moving average. (EMA), not SMA, not RMA. In weekly chart.
Based on all of this our possible strongest support zone is at the 13-16k USDT range. Just like my last BTC analysis.
This analysis is extensive. I know, I could say a lot more, but Wyckoff's theory is perfect in this case. The cumulative phase ignores Phase C, but the distribution phase is successful. We are currently at 0.5 Fib, an area to my personal taste considered as psychological.
Without anything else to say, I am tired, I would cover many more things, but believe me this is enough. The last thing I can add. It would be that this year looks a lot like the development of BTC in several years. I remind you that this was already coming, in technical, statistical and fundamental analysis. Check out my idea of the Economic Crisis, and see how many patterns could be visualized in BTC. There is no way to analyze, open your mind to this world, not everything is Candles, not everything is patterns, there is pure mathematics, programming, among other things and ways of seeing Technical Analysis, no one claims that it works perfectly. , but we are people trying to speculate projections. And I know this will give you an idea, personally and started to gradually buy all kinds of solid cryptocurrencies, with nothing more to say, Enjoy this analysis and I reiterate, see my long-term analysis of BTC. Up long ago at 53k USD, where I mentioned the drop to 13-16k USDT to perhaps be in a small cumulative zone and return to the upside. With nothing more to say, I hope you liked it.
Long Term Idea Uploaded months ago, you have the chart above.
I cannot predict the accuracy of the time it will take. But if you bet that we will touch those levels. All the best.
Hello, how are you? Because you are somewhat stressed by the current situation of Bitcoin, it is understandable, do not worry. I introduce myself. I am Sofí the owner of this TradingView account, we are currently going through the classic correction after a rather gigantic Bullish stage.
First of all, tell you that everything here is well founded, and nothing is taken out of nowhere.
First of all, let's see some history.
BTC started its upward path as of March 11, 2020, From 4K USD to the Current price, in an incredible way Bitcoin in that process had a growth of 1200%. Until April 12, 2021. Where a drop that currently takes 45% began. Taking into account only the closing price, in Graph Line. This is explained in our free guide here on TradingView.
1200% Rise.
-45%
Taking this into account, what happened this year? What makes it different?
This year some relevant things have happened, for example, the growth boom in the adoption of cryptocurrencies in society, important people entering the market, new ecosystems appearing. Among many good things to highlight. But everything good has its negative side. For example, people who misinform about the technical analysis in social networks giving invalid analysis, Exchange disappearing out of nowhere, Many losing money due to the misuse of cryptocurrencies, Strong criticism of BTC that generates doubts if it can really be adopted or not.
The reality is that many cryptocurrencies have more value given by people than by the project itself. And this does not happen only with cryptocurrencies called "Shitcoins" but also with solid projects.
The concept of cryptocurrencies is that the current value is given by people, but a certain value is not supported by the achievements of that cryptoactive.
Data
Many will criticize me for what I will say, others will hate me, but it has its logical part, and no one will deny it, many bought BTC above 10k. Thinking it would keep going up, including people who bought at 64k. And they bought back in the falls, which are currently in losses, for not being informed, for believing that it would continue to rise, the reality is that the largest purchase of BTC happened at 10k levels. Hence the growth of this was done by retailers. Do you really think that the institutional bought at 30k-64k? No. Most of his acquired BTC was in 10k. And I will show you with simple statistics. Giving proof that the rest of the value of BTC was put by Buybacks made by institutional, whales and retailers, but on a smaller scale. The reality is that Bitcoin obtained an inflated value, this is due to the growth that it had in itself, the pandemic that some looked for ways to generate money, among other things to highlight, also the issue of economic crisis that I have spoken here in tradingview we have quite a long thread explaining everything. Knowing this, you will understand that most of the value of BTC is inflated. The Bitcoin proposal is incredible. But its current achievements don't underpin all the growth to 64k. This is where theories such as Wyckoff or Eliot that we will talk about in another moment are born, where they inflate the value to obviously suffer a setback to its real value from investors who really informed themselves and did not enter with the purpose of becoming millionaires as many entered this world. Or will you tell me that you took the time to do your research before investing? Most people only bought, to buy. And it is a reality. Now the market has to get those people out. And it is what has happened in all cycles, Euphoria for growth, massive purchases by uninformed people and when they see the fall, they sell and accuse the cryptocurrency of a bubble. Yes, of course, it is inflated, as are too many assets in different areas, but serious investors know that in the long term it will always go well.
Bitcoin has no true value to support that 64k USDT. Beyond the euphoria generated, since the first cryptocurrency city does not yet exist, we only have a small adoption in society. The Bitcoin market in society does not exist yet. This is just the beginning, we are betting on a promise, a promise not yet fulfilled. And that is the reality. But this promise is giving incredible returns to well-informed people, and who believe that the promise of living a world where the economy is not managed by the government, that transactions are fast, a world of digital economy, of access for all . We have had several achievements this year, we still do not get the whole society to know this world, and that is why that value is not yet endorsed, but imagine that without the need for society to know it, we reach a fairly high value, imagine what that you can get Bitcoin in the long run, if the promise comes true, if the world adapts this technology to its daily life. The projection you can give yourself is simply incredible.
You can take TESLA as a base, TESLA has value because it is the promise of the company that possibly takes us outside of our planet, but the reality is that its market in society does not yet exist. It is still just a promise. Keep it real. We all want Bitcoin and our investments go up, but something nice when it comes to investing simply in the fundamentals is managing your risk, hope for the best, but always be prepared for the worst.
Already making this reflection, I invite you to read my Post regarding the economic crisis, so that you understand what is happening not only in Bitcoin. If not the economy in general.
Understanding this, you will understand what I want to get to, what happened in this fall has happened 3 times in the past. And what is happening now, Bitcoin happened in the crisis of 2008. You have already changed your idea, you have the desire to inform yourself and invest in the long term, you understand that you are not at a loss, you simply invested by fomo, or perhaps you are one of the people who He invested in becoming true information before doing so. Either way, let's move on.
Technical Analysis and some Statistics. [/ b]
Many traders on YouTube, on other platforms perform short-term analysis, I do not criticize them, really many do it great, but in reality in general many have failed their analysis because many traders only view and study courses or people who are not really informed As extensive as the technical analysis is, Few know that it is Backtesting, Order Flow, Volume Profile or simple Heikin Ashi. Which are tools and forms that help a lot to give yourself a better performance when it comes to analyzing and realizing that cryptocurrencies is the worst market to trade.
Let's start. When and why did the fall begin?
The fall began on April 12, 2021. This day several things happened to highlight. First of all, the first Bitcoin Panic happened. Many were afraid that it might happen at this point. Because the bull channel was weakening and there were a number of ways to see a possible drop in Bitcoin. Let's go see them.
1- Let's go to this date. First way to see it. Bullish channel weakness.
Here we draw a parallel channel with an uptrend. You can find the tool in the Trend Line section. We can see that, these days, BTC was not having enough strength and was testing the bottom of the channel repeatedly, which was quite negative for it. Since it meant that there was no buying force and the sell had clear resistances, finally breaking down on April 18, 2021. Out of the bullish channel. Many returned to chart another way to see the bullish channel. But the reality is that in graph 1d. It had already been broken. This channel is created since December 11, 2020.
2- Ascending Wedge Pattern.
As always in these times BTC had some exaggerated shadows that currently magically disappeared, so for patterns I personally prefer to use Lines since it is much more efficient in these areas. If we use Lines we can see the Ascending Wedge more clearly, which is a pattern that can mean loss of strength of the current trend. If you see it, you can't break it. You can generate Fake V (False Breakouts in a V shape that will return to within the pattern, in this case the false break that I try to return to the trend.
Here you can see the Fake V, trying to get back to the bull channel, which sadly was not achieved. At this point it was already known that cruel times were coming for the cryptocurrency market, how? Simple in CFTC Report (Community of Stock Market Futures Traders) a quantity of 300 Shorts had appeared in just 1 week. Giving signs that the institutional ones were betting lower on #Bitcoin. It was already perfect time, to Open Shorts. And go along with what they expected.
3- Pattern M [/ b]
The M Pattern is a Bearish Pattern, there are 3 that are general, then others invented by other authors, this is an Extended M, This type of pattern is usually confirmed with statistics or with the theory of forbidden to exceed the maximum peak, taking input the Maximum Peak, Average Peak, OR after a Pullback, these three inputs are totally true, although it is always recommended to verify it using the ARMA, ARIMA method from statistics or econometrics, as you decide to call it. But it could be called as the Mathematical and Algorithmic part of Trading. We can also use the OB and MB to verify it, in this case I only base myself on the view of MACD, RSI and Volume Profile. It gave no indication of returning to the upside and did not break the no-peak rule. So enter. in the 59k zone. Short.
We could also see a Short M Pattern, but actually, I don't take it into account due to the empty area that I place with the arrow.
4- Mini-Shoulder Head Shoulder
This would be to rule out the previous fall and visualize the next one as of May 16. The idea of an HS could be started. (HCH = Shoulder Head Shoulder), the volumes, OB and MB were perfect. As well as we could have the idea of a mega HS. That would confirm the theory of setback at 0.786 of each cycle, which I will explain later.
5- ABCD Harmonic Pattern
Although it does not meet the levels perfectly, it is within the range of 0.618 to 0.786 and 1.27-1.618 so it could be considered a bearish ABCD harmonic pattern. That was perfectly accomplished, resulting in a decline towards current levels. Another way.
Classic RSI & MACD Indicators
1- MACD
This is where what I said comes from, "The biggest purchases appeared at 10k-20k. As we can see even though the price continued to rise, a Bearish divergence is clearly seen in the MACD indicator, Let me explain what was happening and nobody saw MACD has values that indicate the strength of both the supply and demand of any asset according to its price action. Quite useful in general. But let me tell you that this decline was seen to come a long time ago.
Correction
As we can denote the MACD since Feb 21, the MACD obtained values of 5153 in the Long Moving Average (Blue). And so on, the Short (Orange) moving average also obtained high values. But from there, despite the fact that the #BTC price continued to rise, a clear bearish divergence could be seen, until we touched low levels compared to 5153 which meant that the demand for purchase was decreasing, this was already a bad sign and as of April 13 we see the loss of strength, for April 18 to break down and on April 24 to reach 0 values in the indicator then we had the Fake V trying to return to the trend, but in the indicator we could not return at high values returning down to the present where we have values of -4605. This is the first time that #BTC obtains values in the indicator that are so negative. The values in the MACD is a way of being able to see the development, not everything is based on the Cruze of moving averages. Extensive topic. But I would like to one day play it with our programming team to explain it
If we changed to just looking at the BTC graph, everything seems to continue to rise until it touches those low levels of MACD compared to its beginnings where it began to put something lateral.
Bullish:
Bearish:
2- RSI [/ b]
The RSI indicator is similar, with the difference that it has parameters that limit it to Over-Buy & Over-Sell zones, as we can see it is similar to MACD with bearish divergence and we are touching the oversold levels, before apply the rule that all the traders you buy in Over-Sell tell you, I want you to review all the analysis. First.
3- Echocastic
I do not like using this indicator very much, but some use it and I will summarize it to my personal opinion, Ecocastico in natural configuration only shows overbought and oversold zones, it does not present divergences, it only prioritizes it, looking for the person to enter long or Short at this point, the negative is that by not presenting divergences, many people tend to enter areas of long overselling or short overselling without knowing that these levels can be maintained for days, weeks or months. In a Market change. (Bearish Market). Since the level remains the same, but the value of the asset continues to fall. If you use this indicator, you must have another one as a complement, to be able to prevent a possible fall by not seeing any bearish divergence in it, but in relative terms it is quite good if you master it, for this it is always recommended to perform Backtesting.
SEEING seen several ways that anyone could prevent the fall, do not blame the market for your losses, actually it was coming, you can see our idea raised months ago here.
The analysis was uploaded in the English community. So I apologize if it is not found.
Now, well, we already started the fall, what awaits us?
Well let me answer you in the next part.
Market theories
1- Eliot's theory
According to Eliot the market is based on Ondas.
1.1- Impulse Waves:
In this case, I already tried to place the first Wave from 4k USDT which is where I started to rise, but it does not meet the rule that wave 2 must reach levels of 0.618 minimum. Fib in Retracement, so I discard it and we place from 23k. Up to 40k the first Wave. Where if this rule is validated.
By doing this, the rule is fulfilled. To measure a retracement, the maximum peak must be 0%. This is a basic rule of correct use of Fibonacci, sadly it does not let you place the Fibonacci tool directly gives you Fibonacci retracement, but with some configuration and use you get it.
1.1.1- Wave 1-2 Rules:
Wave 1 - Usually appears after a 0.5 retracement at the Fibonacci level. (Discarded) This rule is not totally necessary.
Wave 2 - Usually the 0.618 retracement minimum. up to a high of 0.786 Fibonacci Retracement of Wave 1.
Applying the rules:
As we can see we touch 0.618 which is the minimum.
Accomplished.
1.1.2- Wave 3-4 Rules:
Wave 3- It is usually a Fibonacci projection of Wave 2 minimum of 1.618 this wave is usually the longest, although not necessarily. The only requirement is that it is not the smallest. This is put into the Eliot Theory book in English. If I remember the name I will leave them in the comments. Projection you can use the same retracement by setting the maximum peak 100% or the Fib spread. To your liking
Wave 4 - It is usually the retracement of Wave 3, being valid if it tests minimum levels of '0.23 and maximum 0.382. Fibonacci Retracement.
Applying the rules:
Wave 3: If we use Retracement to carry out the projection, we can see that the 1.618 level is easily exceeded, this projection being set from Wave 2.
Wave 4: 0.382 Maximum retracement, Fulfilled.
1.1.3- Finally Rules of Wave 5:
Wave 5: This is a projection made from Wave 4 seeking to hit the minimum again at 1.618. Even much more. In this case I am forced to switch to Candles, since Line does not comply with it exactly.
1.1.4- Using Fib Extension for Wave 3 and 5.
Some do not want to use Retracement in these cases and prefer to use the Fib Extension for searching. In this case the accuracy is a little better. But on Wave 5, he ends up invalidating it.
Wave 3:
Wave 5:
1.2- ABC Correction of Impulse.
1.2.1- Wave A: It is usually above Wave 4 of Impulse Waves.
1.2.2- Wave B: It is usually the corrective of Wave A, being less than 75%.
1.2.3- Wave C: Same length as wave A, 150% -161.8% of wave B or 261.8% of wave b in extreme case.
In this case it is fulfilled, With Projection using Retracement, but it is time to use Extensions and see. Also in this case.
1.2.4- Using Fib Extension.
It would lead us to test 21k USDT. In the Extreme case.
Actually, although many like Eliot's theory in this case it is not perfectly fulfilled so I am not taking it as the main idea.
2- Wyckoff theory
Have you ever wondered how institutional investors manage their positions? What do they continue to do now and what will they do in the future? Tracking and tracking the whales is critical to making a profit in the markets - such investors are the overriding force behind every trend, and you'll be crushed if you get in their way.
Richard Wyckoff dedicated his story to learning about the trades of these investors. Its trading procedure is based on the investigation of market cycles, the interpretation of volume and the equality between supply and demand, the only indications that these institutional investors leave on the chart.
He has been one of the pioneers of technical study in the early 20th century. Wyckoff was described as one of the TA Titans along with Gann and Elliot. He was an avid student of the markets and an active trader. Early in his career, he identified the business of the legendary occupational operators of his time: J.P Morgan and Jesse Livermore. He closely inspected how they developed and maintained their tactics. All of the above helped Wyckoff develop techniques to assess the future direction of the market by analyzing cost action and volume on the charts.
As Wyckoff mentioned, small retailers are constantly losing a huge amount of millions of dollars to institutional entities. He dedicated himself to educating the public about how these giant investors operate and wrote several books on this matter.
Even though several of the techniques used by such investors during the 20th century are now illegal, Wyckoff's methodology for assessing the future direction of the market is still quite important.
Wyckoff reached the conclusion that the market action is a constant repetition of the same 4 stages: accumulation, margin, distribution and reduction. All these 4 stages happen directly thanks to the manipulation techniques of the “smart money” market.
The accumulation stage is generated in the graph as a narrow trading range in which institutional operators absorb the majority of the available supply of occupations.
Then, since the available supply is quite low, the demand increases, which produces a deep margin shift.
When cost and demand reach their highest point, institutional operators begin to lower their supply little by little, covering all the demand and building a tight distribution range.
Since each of the occupations remains in the hands of retail traders and there is no buying interest by institutional traders, the cost inevitably falls building a markdown stage on the chart.
To make the greatest profit in the markets, a trader should look at and understand how such institutional investors operate and follow his lead.
The composite man
The Composite Man is just a fiction. It is the addition of occupations of various skilled traders that occur simultaneously.
The composite human carefully plans and does his operations. He is interested in retailers to buy an asset in which he has already accumulated a position by doing many transactions, both buying and trading, thereby building high volume and advertising the asset as is.
Wyckoff and his students believed that if one could understand the activities of the Composite human being, he could discover many business and investment opportunities and profit from them.
So how do we apply this criterion to our business tactic? As you constantly study the cost and volume shift on the chart, take a step back and ask yourself the following questions:
What is the reason for the composite human being?
What is he doing right now? Accumulating, distributing or lowering or raising the price mark?
How do you earn money? Who loses thanks to the occupations of the Composite human being?
If I were the Composite human, what could my next step be?
Don't worry if you can't answer quickly - these questions are very complicated and require in-depth study. It is a job of the compound human being to cover their tracks: the less the population understands their motives, the more money they earn.
Fortunately, even though the activities of the Composite human being are stealthy, they remain traces throughout the graph and it is convenient for us to find and interpret them correctly. However antecedent to delve into technical research and graphics, we must understand the 3 main principles that are behind each cost shift; the so-called "Wyckoff laws"
Wyckoff's 3 Primordial Laws
Wyckoff's tactic is based on 3 primary laws, which help to detect the superior markets to trade, identify the bias of the future direction of costs, dictate when an asset is ready to exit a trading range and project ends of costs based on the conduct of the asset in its negotiation. distance. These principles are basic and have to be fully understood antecedent to follow.
The Law Of Supply And Demand
The first start is simple: once the demand is greater than the supply, the cost increases and once the supply is greater than the demand, the cost falls. Constantly that the Composite human being gets a significant part of the available supply, the supply / demand equality changes and the cost, naturally, begins to rise. If the Composite human releases his previously accumulated occupations, he shifts the balance back and the cost marks down.
A trading range (accumulation or distribution) symbolizes an equilibrium of supply and demand; assumes that there are 2 strong regions: a demand (support) region and a supply (resistance) region located side by side. The cost often oscillates between those 2 levels, while occupations change hands, whether it is from retail traders to composite man (accumulation) or from composite human being to retail traders (distribution).
To understand whether today's trading range represents accumulation or distribution, students in the Wyckoff procedure analyze the interaction between cost and volume and look for special events.
The law of effort versus Result
Volume is effort and cost change is the result. An effort is necessary to promote cost, whether it is increasing sales volume to minimize cost or increasing purchase volume to increase cost. If volume expands in the same direction as cost, it is a reliable trend continuation signal.
However, if there was a great effort to promote maximum (or lowest) cost and it did not result in a proportional cost change, then something is fishy. This behavior is called Cost and Volume Divergence, and it gives early guidelines for probable trend reversals.
This cost and volume study not only works in range markets, it also helps to identify directional biases throughout a trading range. If throughout a range, the purchase volume peaks do not move the cost much higher, it assumes that there is still a lot of supply and it is unlikely that the cost will rise until all the supply is absorbed. The same beginning applies to the opposite scenario: if over a range a high volume of sales does not result in a deep downward shift, it assumes that there is a lot of demand, the Composite human being is potentially increasing his position in the degree of today.
The Law Of Cause And Impact
This law is related to the beginning of supply and demand. Before any impact there should be a cause. And this impact will be proportional to the size of its cause. Accumulation and distribution are periods of creation of the cause. So the next markup or downgrade is the direct impact of this motif.
The cost cannot rise without a preliminary absorption of the supply and it cannot discharge without covering the majority of the demand. The longest accumulation (or distribution) involves the Composite human having acquired (or distributed) a majority of accessible occupations. Therefore, the next shift is going to be much deeper, as it requires a lot of liquidity to completely exit your position.
Analysis of trade ranges
The primary goal of Wyckoff's analysis is to enter the market at the right time, anticipating moves in the right direction, minimizing risk exposure, and increasing potential gains.
All of this is done by analyzing the trading ranges and identifying whether the current range is an accumulation or a distribution.
Wyckoff's method provides guidelines for determining events that occur in the trading range, helping to identify future directional bias. These events are shown in the famous schematics, created by Wyckoff and his students.
1- The trading range is divided into stages, and each stage comes with a group of events that define it. (Accumulation).
Stage A represents the outcome of the previous downtrend (of at least one intermediate). There are 4 events associated with it:
- PS (preliminary support) is a degree of support in which the increase in demand signals a viable end of the downgrade. Generally, it has pre-eminent volume over average and a wider candlestick spread.
- SC (sales climax) is a point at which the marketing pressure reaches its climax, and where the composite human being shows his first interest in marketing activities, immediately buying the panic of the retailers.
- AR (automatic rally) is a rally that is generated due to the cessation of marketing pressure. This rally should have a wider margin than previous ones to ensure that the previous sell-off was a climax. If that happens, the conjunction of SC and AR creates an estimate of the trading range parameters. There should be support close to SC and resistance close to AR.
- ST (secondary test): cost returns to SC levels to review the strength of demand in this area. To confirm a trading range that must remain in this area, any separation from the SC area must be an immediate high-volume return in the trading range.
Stage B builds "a cause" for the new trend. This stage represents a slow accumulation of activities in anticipation of the uptrend. The composite human creates a high enough demand in the lower part of the range and pushes the cost down in the preeminent part of the range. This process can take a long time, depending on the Composite Man's ability to control cost. This stage can integrate some novel tests of the lows (ST) and numerous novel tests of the highs (AR). Keep in mind that these novel tests have the potential to go out of the trading range to interfere with bankrupt retailers, yet the composition remains intact as long as the cost immediately returns to the trading range.
To further confirm that you are currently in Stage B, look at the volume. At the beginning of Stage B, the swings tend to have a maximum volume, which falls more and more as the consolidation continues.
Stage C is where the Composite human verifies if an asset is ready to go by demonstrating the remaining supply. There are 2 primary events:
Spring (jolt): a drop in cost that takes you below the lows of the trading range (below the ST or even the trading climax, depending on how deep it was). In most cases, it is the last attempt of the Composite people to obtain low-cost occupations prior to the margin shift. The build-up of marketing pressure forces retailers to think that today's trading range will culminate in the displacement of markdowns and will exit or reverse their positions. The Composite Man waits for separation to produce sufficient liquidity and then immediately covers all available supply, causing the cost to return to the trading range.
- Testing: a tiny pullback to check if there is enough support at the bottom of the trading range after a reorganization. The composite human stops his buying pressure and checks if the market has enough demand not to allow the cost to fall below the trading range. If it is this way, the market is ready for margin shift. If not, the Composite human continues to accumulate the available supply.
Stage D - Make sure we are right with our previous study. If we correctly interpret the spring and previous tests as bullish signals, then demand should prevail over supply and cost should gradually rise to the TR highs. Stage D has 3 events:
- LPS (last fulcrum) is the attitude after a test rally. Generally, it retests previous levels that were considered resistance. These attitudes are usually quite slow and do not have volume.
- SOS (Sign of Strength) is a rally with a volume notably preeminent to the common and with a more extensive cost differential than the candles. Mainly take the cost above AR.
- BU (Back up): short-term attitude to SOS, slight profit taking by Centimeters (demand test) and new test of the maximums of the trading range. It is the last chance to get on the bull rail.
Example en BTC:
2- Distribution Range.
Working in a similar way to the accumulation trading range, the distribution range is characterized by several phases:
Phase A of the distribution range marks the end of the previous marking movement. It mimics phase A of the accumulation range, but with preliminary supply (PSY) instead of preliminary support and buying climax (BC) instead of selling climax. AR and ST work in exactly the same way as they do during a build-up phase, but in this case AR is driven by a lack of demand after the rally and ST is a retest of the previous highs, not the lows.
Phase B is the consolidation phase. Usually there are several new tests of the highs and lows of the trading range. These movements are usually there because of the constant struggle between supply and demand: the Composite Man tries to get rid of all his stocks without scaring the public of his asset, he wants to get rid of his entire position with minimal slippage, so he needs to Hold demand at high levels, causing the price to rise and recover from the liquidity provided by emerging operators.
There are several events that occur during Phase B:
SOW (Sign of Weakness) is the first major settlement after the auto rally. It usually breaks the lower part of the trading range, which shows a change of character in the trend. Indicates that the offer became dominant. The move to the downside should be in above-average volume and a wider candlestick margin.
UT (Upthrust) is the opposite of Spring - it is a quick move above the trading range (usually at low volume). It is there to test demand levels and gain additional liquidity from bankrupt traders. Often these are levels at which the composite man initiates his short positions.
Phase C is the phase where the CM makes the last attempt to shake up the retailers before the markdown phase. It is your last chance to sell the remaining shares and / or open short positions at the best prices. The main event during this phase is the UTAD (Upthrust After Distribution), which is the same as a UT, but is generally much more volatile. Note that this event is not required, just like Spring is during a rollup; the presence of this event depends on many factors, including fundamental events and the availability of excess demand.
Phase D is where the price finally breaks the bottom of the trading range. At this point, it is obvious to everyone that the supply is dominant and that the previous uptrend is totally exhausted. There are recent unsuccessful attempts to increase the price, which generally have low volume and low spread. The events in this phase are: LPSY (Last Supply Point) and SoW (Sign of Weakness).
All right, let's imagine that he has seen Phase A in action. There was a strong sell-off on the volume increase and an immediate Auto Rally. When is it safe and profitable to look for shorts? What price action events confirm that the trend is about to turn?
An aggressive trader could spot the change in character and the first signs of weakness from the demand side and enter a short position at the first UT or UTAD in Phase B. It is a solid move from a risk / reward perspective, If a trader detects clear signals that the trend is exhausted, he can potentially enter the best possible prices. But the Composite Man is patient and will likely push the price up to UT levels at least several times. By shorting UT / UTAD, the trader takes a low-risk trade from a price perspective, but potentially locks his funds in the trade for a long time.
The safest approach is to wait for the SOW in Phase D and enter LPSY. Sure, in this case, the trader risks the price returning to the highs of the trading range, but even if this happens, he can quickly cut losses from it and enter the next signs of weakness.
Let's go through all the steps that should be part of the thought process of the trader who wants to apply Wyckoff's principles in his own trading strategy.
Example in BTC:
Wyckoff's theory is the most successful so far in BTC. And it is the one that I am basing myself on since it agrees with an idea that I have long ago.
Personal Theory.
Every so often after all the euphoria, there must come the Bearish, Classic Corrections, that no matter how much euphoria there is, they must happen. To form this theory we will use Fibonacci Retracement. Volume Profile. And simple logic. Next to the PiCycle Top indicator.
Let's First Explain What is PiCycle Top?
PiCycle top is an indicator that has existed for years that has managed to hit 3 maximum peaks of BTC. And with this year the fourth.
Its function is basic, a long moving average of 350 multiplied X2. between a short moving average of 111. When there is a Cross between these, it can be indicated that the Cycle has come to an end, or start a Double Cycle. Both options are valid. Already knowing this.
Let's build on history.
First Top Cycle.
Nov 14, 2011 to April 08, 2013.
We can notice in this perfectly that if we take into account the shadows it always usually touches 0.618-0.786 in Fibonacci Retracement. Even if it is in the shade.
Adding that if we add Fixed Volume Profile term. There is always a good 3-6 support zone and rarely 8. Volumes above the highest demand.
Adding that in this case, when testing the 50-period moving average, a double cycle began.
In this case the support is at 0.786, Test 50 Period Moving Average (EMA) on Weekly chart. And Its support is 4 volumes above the most demanded zone.
Second Top Cycle.
Jul 01, 2013 - Nov 25, 2013.
We can see a Double Cycle in the same year, this being a growth of 1181%. And finding support at the 0.786 Fib retracement level.
Being 3 times above the most demanded volume. Your support. At 0.786.
And returning to the upside in the testing of the 200 Period Moving Average (Weekly Graph).
Third Top Cycle.
Jun 15, 2015 - Dec 11, 2017.
This cycle has been the most ridiculous in which BTC had a gigantic growth, being a growth greater than 5000%. And in this cycle history repeats itself.
0.786 most demanded support. And it returns to the upside when testing the 200 Period moving average on the Weekly chart. and finding support again 4 volumes above the most demanded area.
Four Cycle, Actuality.
Based on this repetition, our support would be testing the 200-period moving average, we have 2 points to take into account as a difference.
1- We have an economic crisis with a pandemic in full swing, which can break this pattern further downward.
2- We have more attention from different investors that could make the current 0.5 Fib zone the zone to return to the upside.
Ignoring these two points and just relying on theory. Our most demanded support would be at 4 volumes above the highest demand zone, up to a maximum of 8.
We would be looking to test the 200-period moving average. (EMA), not SMA, not RMA. In weekly chart.
Based on all of this our possible strongest support zone is at the 13-16k USDT range. Just like my last BTC analysis.
This analysis is extensive. I know, I could say a lot more, but Wyckoff's theory is perfect in this case. The cumulative phase ignores Phase C, but the distribution phase is successful. We are currently at 0.5 Fib, an area to my personal taste considered as psychological.
Without anything else to say, I am tired, I would cover many more things, but believe me this is enough. The last thing I can add. It would be that this year looks a lot like the development of BTC in several years. I remind you that this was already coming, in technical, statistical and fundamental analysis. Check out my idea of the Economic Crisis, and see how many patterns could be visualized in BTC. There is no way to analyze, open your mind to this world, not everything is Candles, not everything is patterns, there is pure mathematics, programming, among other things and ways of seeing Technical Analysis, no one claims that it works perfectly. , but we are people trying to speculate projections. And I know this will give you an idea, personally and started to gradually buy all kinds of solid cryptocurrencies, with nothing more to say, Enjoy this analysis and I reiterate, see my long-term analysis of BTC. Up long ago at 53k USD, where I mentioned the drop to 13-16k USDT to perhaps be in a small cumulative zone and return to the upside. With nothing more to say, I hope you liked it.
Long Term Idea Uploaded months ago, you have the chart above.
I cannot predict the accuracy of the time it will take. But if you bet that we will touch those levels. All the best.
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Hello answering some questions. Yes, 0.5 Fib is a psychological zone, A classic, Being -50% in summaryWhat happens is that BTC at these points must be said, whether to continue the trend or lose it. I personally bet short what 20k played in each photo
Hence, I expected it to be in that range and it will manage to return to the upside after a certain indeterminate time can be weeks, months, or years.
But from now on it will be lateralizing just like what happens now.
We played 59k, We fell to the present time, I hope it lateralizes a bit because falling direct to 16k would be weird. In the best case BTC break 58k and could return to the upside suddenly, but I doubt it exceeds 52-48k in case of a Bullish now to fall again
Personally, I do not think that 0.5 Fib is the bottom of this fall, I still hope more
But you still have to start buying scalarly
Expect Bullish to 48k-52k product of the July Germany ETF. My drawings in the chart mentioned above are not random.
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2/2So we go, From March-April saying the Wyckyoff theory.
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Idea Abril :הערה
4h Charts, Overbought Indicators, Stop Profit and Let Run.הערה
Fibonacci Channel
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