This article is only a personal market view and does not constitute investment advice. If you act on it, you are responsible for your own profits and losses.
Beijing-based traders: on-chain data users, trend traders.
Who is buying? Who is selling? - This question should be something we should always think about. The trend of technical graphics corresponds to the answer to this question. This is related to the group psychological factors behind the trends of different technical graphics, which is also the basis of technical analysis. Why are some graphics with high accuracy and some with low accuracy? Because some graphics do not have strong psychological causes (such as triangles, flags, wedges). The most effective graphics are double bottoms/tops, rectangles, head and shoulders bottoms/necks, because there are clear psychological causes behind them.
I mentioned on Twitter before why we often see false breakouts nowadays.
So in general, the reason behind a false breakthrough is that big investors are selling and retail investors are buying, which is an artificially created breakthrough. In the case of last night, the market used the combination of false positives and big positive lines to make people who didn't have time to think enter the market to buy, causing greed and excitement, and thus completing the shipment. Before the news was falsified, the price had already experienced a significant correction, which was obviously not something that most retail investors could react to, so the only ones who were selling were big investors or retail investors who reacted quickly, and the only ones who could take over and buy were retail investors who reacted slowly.
From this perspective, last night was most likely a false breakout, which meets the first type of false breakout situation. The result of a false breakout is to go back to where it came from.
Next, let's think about another question: when does a false breakout turn into a real breakout? This is related to the choice of buying and selling points in trading. The answer from Beipiao is - it exceeds the high point formed during a false breakout. Because it can exceed the previous high point, it means that the short-term selling funds have been digested, the hot money for short-term trading has left the market, and real money is entering the market to buy.
Combined with the trend of last night, there are two points that can be regarded as the previous high. One is 2.86w, which can be regarded as a false breakthrough of the 120-day line. If the subsequent daily level closes higher than this price, it can be regarded as an entry point. The other is last night’s high point of 3w, because after yesterday’s breakthrough, the price soon fell back. If this K-line is used as a reference point for a false breakthrough, 3w is the previous high.
Back to the market itself, Beipiao believes that the current market is in a potential head and shoulders top shape. Last night's high point is likely to be the top of the right shoulder. At present, the symmetry between the two is not bad. The symmetry in time and price is good. We will continue to see whether this shape can be formed.
Judging from the waves, there was a very obvious 3-wave rebound at the daily level.
Combined with yesterday's high point, which saw a huge amount of transactions and a significant reduction in contract positions, Beipiao believes that this rebound has come to an end. The subsequent market will at least fluctuate in the short term before making a choice. Whether a false breakthrough can become a real breakthrough depends on the direction chosen after the shock.
In addition, the same plot actually happened once in April 2019. On April 2, 2019, a false news about the approval of BTC ETF circulated in the market, but a clear difference could be felt. The news was quickly disproved on the same day, but because the market had been hovering at the bottom for nearly half a year, it used this news to complete a technical breakthrough at the key position of the breakthrough point. The fake play became real, and the subsequent volatility lasted for another month, and then the bull market of 2019 began. The breakthrough on that day was also a breakthrough for the entire market. It was not just BTC that was strong, but all currencies in the market.
The sentiment this time is obviously not comparable to that in 2019, and the increase is extremely low. The rebound of small currencies with more price elasticity should have been greater, but the reality is that small currencies are even more miserable. Therefore, Beijing Drifters do not think the two are the same.
In summary, the view of Beipiao on recent trading opportunities is:
1. Daily closing above 2.86w and 3w will be two suitable buying points;
2. When the price is below 2w8, it is the time to short sell.
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