My Method Of Analysis

The aim of the Wyckoff approach to technical analysis is more or less to determine what large investors are doing and attempt to trade with them rather than being cannon fodder for their stop hunts, sell offs, and buy ups after panic-induced selloffs. I won’t go into enormous detail about Wyckoff, but it is a powerful tool when used correctly. It is NOT a pattern system. It takes a long time to master, and I learn more and more every single day. Quite a lot of the content of this article thus far is based on Wyckoff concepts. The vast majority of technical analysis is based on Wyckoff’s research, but each has been an attempt to make this form of analysis easier to understand and use. Wyckoff centers around the concept of supply and demand, and traders like myself use this form of analysis to try and determine if the majority of institutional level investors are accumulating or distributing their positions. Larger investors are almost always buying or selling in bulk, so to ensure their holdings are purchased at the best possible price and sold at the best possible price, price action is held in a range. Why? Because attempting to immediately sell massive positions will result in lower and lower sell prices as each bid price is filled, and market buying would result in buying at higher and higher prices as each ask price is filled — especially if these positions were bought or sold at market. These large investors hold price in a range and rely on stop hunts and painting false bullish and bearish signals via automated trading to trick retail investors into either buying or selling to them at lower or higher prices. Most of the crypto community refers to some of these resulting patterns as barts, which is basically a flat or slightly slanted period of movement followed by a sudden drop down or sudden spike upwards that can repeat numerous times in a range. These ranges can be traded, and honestly, they provide some of the best trading opportunities if you know what you’re doing. If you don’t, you have likely been chopped near to death over the last couple of months.

To aid my Wyckoff analysis, I use Fibonacci retracements, volume weighted average price (VWAP), Weis Wave, and a couple of indicators of my own design. Why? Because institutional algorithms are often programmed to trade based on the first two. For example, buying below the VWAP or a moving average of the VWAP means getting the cheapest price of the day or over X periods. Traders working for large institutions often receive bonuses for making a high percentage of their purchases below the VWAP. Weis Wave was designed specifically for Wyckoff trading — its a cumulative volume indicator more or less.

In short, I want to be trading with the big boys and not against them.

To aid readers in obtaining a better understanding of my chart labeling, you can visit:

http://www.ltg-trading.com/glossary-of-wyckoff-terms/

http://stockcharts.com/school/doku.php?id=chart_school:market_analysis:the_wyckoff_method

Let’s Take A Look At The Current Range

I have noticed some evidence of accumulation between $7000-$9200, but for this to truly play out in a bullish way, we need a change of character for this range. This would require at least breaking above the downtrend line of the range. Preferably, I would like to see a new or equal high rather than a lower high, but getting above the downtrend would keep me bullish for this range. Judging by the signs of weak supply above the PS, a spike above $10,000 off of a bounce here isn’t impossible by any means. Though I am more of a “here are some highly probable scenarios” kind of analyst and not one who often predicts claiming high levels of certainty, I do feel like a correction either here that makes a new low or another bounce that breaks the downtrend and makes a new low, preferably to about $5500, a level I’ve mentioned multiple times in this article, would be quite bullish. Sometime around the month of September, I expect Bitcoin to either reverse into an uptrend continuation or fall into a downtrend confirming a bear market,, and I will explain why I’ve chosen this date further down. At the present time, I do not have enough data to say for certain which direction will we go. The chart above lays out a potential bullish scenario. The cart below lays out a potential bearish scenario, but the latter at this time appears to be less likely. However, as I said above, if this were to fall to a new low and fail to reverse, many of the accumulated positions in this range will likely be sold off as would many hodler positions being held in cold storage. This scenario would be quite bloody.