Lately, I’ve come across a number of online posts of those trying to predict the “future” of the cryptocurrency market based solely on TA (Technical Analysis).
TA (Technical Analysis) can be very helpful, but we should always take into consideration and pay close attention to price and volume action instead. And then use TA along with indicators (MACD, RSI etc) in order to look for confirmation. Not the other way around. Making financial decisions based mostly on TA more often than not would cause our financial failures.
I’ve even seen some Youtubers showing their predictions based on weekly price movement, which can bring us to very different conclusions comparing to TA if it were vs againts a longer period of time. This is just so wrong.
Anyway, just a few days ago I mentioned that Im seriously worried that we’re currently experiencing a so called “bull trap” on the cryptocurrency market.
At the time, I wrote:
“all big smart money needs to do is to bring the market down to the point that all those stop-losses are being triggered and market will be flooded with cheap crypto. Which smart money can purchase in huge quantities without bringing prices up.”
I found great video created by Mark Chapman, that explains this issue very well:
It’s absolutely worth watching as this video will help you understand market makers better (“How To Destroy The Market Makers”):
And lastly, I would recommend that you spend a few minutes watching it closely (“How to trade bull traps”):
Both are excellent videos.
Personally, I don’t believe that we are “out of the woods yet”.
Over the past few days, prices have been increasing but volume are crazy low, which tells me that there is not much support for the current price growth.
I also do not really see big players being very engaged at the moment. And at the same time we’ve lost many of fresh investors that joined the market in December/January. Some of them sold their cryptos with huge losses (and they will most likely never come back) and many others are holding on to whatever they bought while prices have been very high (which means that their capital has frozen).
Not to mention that there is currently very little interest coming from the general population too and many investors are waiting for the results of the G20 summit that will take place in March 2018.
I would also recommend you to try and use Google Trends as an analysis tool (with phrases such as: bitcoin, ripple, ethererum and other major currencies). You will quickly realize that more often that not, the general population are doing some research first (showing their interest with topics) before they invest. That should be another indication worth taking into consideration.
We should also keep in mind that the general rule is simple: broken resistance is becoming our support. And it works the other way around. So we’re reaching a huge resistance level around 11-12k. It used to be our support for almost 2 weeks January of this year and to break through that level we would need really solid momentum.
Personally, Im holding on to whatever I have and preparing myself for another dip, which would be another great buying opportunity for those who have missed the latest drop. I’ve recently spoken to a number of investors and I’ve also read tons of online posts/articles to realize that, currently most people seem to think of level 8-9k as a huge opportunity and not many seem to be purchasing any cryptos at current price level. So again: there isn’t much buying power that could push BTC through 11-12k resistancel level. Or at least I cannot see it myself.
However, what I am hoping for is, that BTC (and other major altcions) price will start dropping and volume will increase heavily. That would be a great indication of us experiencing a “bull trap” scenario described by Mark Chapman (youtube link above) happening. Perhaps once we would bounce back from another bottom, we may then have solid momentum to break the current resistance levels.