2018-10-15 21:30 |
Bitcoin (BTC) does not just go up and down, breaks supports and resistances based on sudden whims. Most traders are so focused on the 15 min chart that they miss the big picture. They fail to realize that major trading on exchanges is done by algorithmic bots. These bots are programmed to print a certain set of patterns. Have a good look at the above daily chart for BTC/USD. This is a pattern currently printed by the bots for us. To the amateur trader focused solely on smaller time frames, this is a disaster! The price just broke an important trend line that it held since September. This is a clear sign of weakness as Bitcoin (BTC) does not have enough momentum to hold support. However, I propose to you that this is not a sign of weakness, but a sign of manipulation.
A bold statement, I know but I’m going to prove to you that there is a method to the madness. See, Bitcoin (BTC) is not something you trade. It is a game of accumulation. If you want to trade something, go trade currency pairs like EUR/USD or GBP/JPY. I used to do that and made a ton of money. If I were to start trading again, I would not trade an illiquid and volatile market like that of Bitcoin (BTC). Of course, I left the stock market out on purpose. In case of both Bitcoin (BTC) and the stock market, the game is heavily rigged against you, for trading that is. However, in every market, what comes first is the intent. You have to know for sure what exactly your game is. Moreover, you also have to know where you are in the food chain.
Not everyone plays by the same rules. If you are a whale, there are things you can do that a retail trader cannot. At the top of the list of those things is price manipulation. Bitcoin (BTC) being a game of accumulation, the whales are in it for the long term. They need to shake out all the weak hands so they can fill their bags for the future. How do they do this? For starters, they print patterns that are meant to be broken. For instance, they will draw a trend line to give investors a false hope. Then they deliberately invalidate that pattern to create fear in the market. In addition to this, they also use their magic on exchanges. For instance, they place a big wall of sell orders on exchanges. When the price starts to fall, they keep buying with their hidden buy orders.
However, if you do the same thing over and over again, you are likely to leave some marks. The above 3H chart for BTC/USD sums up my argument. I want you to look very closely at the above chart and compare it with the daily chart at the top. This chart that shows Bitcoin (BTC) trading between early to mid April prints the exact same pattern that Bitcoin (BTC) has printed now on the daily chart! Is this a coincidence? Hell no. Has this happened before? Oh yes. This is not the first time Bitcoin (BTC) has printed a pattern that it printed in the past.
If you compare both charts, everything lines up perfectly. In this chart, Bitcoin (BTC) trades in a downtrend. If you look at the first chart, Bitcoin (BTC) is trading in a downtrend. In addition to that, we see a rising wedge on this chart. If we look at the first chart, we see a similar rising wedge. Both these rising wedges then break and the price climbs up a trend line. This chart shows that the price broke the trend line before it shot up to break the downtrend resistance. If we look at the first chart, we can see that Bitcoin (BTC) has broken the trend line and is now waiting to break the downtrend resistance. Looking at these charts independently, we see a picture of chaos and uncertainty. However, when we compare them closely, we see that there is a method to this madness.
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