Bitcoin: Facing A Retrace?

17 พ.ค. 2019

The shorts have been squeezed relentlessly since the 6K resistance, and with 9K within reach, it appears price is poised to correct. How low can it go? This article will attempt to answer that question in a proportional sense. The mistake not to make at such a level is to go into "hope" mode, especially after buying into this move based on a smaller time frame signal.

First, it is important to address an important variable overlooked by most (especially the internet analysts). Short interest. Andrew pointed out an important change compared to the behavior we were observing over the previous couple of weeks. It is decreasing while price is not pushing its high. This change in order flow, along with the appearance of a bearish engulfing candle may signal the beginning of a minor corrective structure.

Do NOT misunderstand. I was not bearish when Bitcoin was pushing lows 6 months ago and I am not about to become bearish now. This is about recognizing and adjusting to new information as the market delivers it. Many have asked if this is a signal to get short, and our answer is still the same: we do NOT short these markets. What we are interested in is where the next correction can possibly complete in order to provide a new swing trade opportunity for a long.

On this chart, which I often share in our chat rooms, there are new levels that are "in play". This means they are proportional to the price history that has taken place since the low in December. IF a corrective structure unfolds, these levels offer a REASONABLE reference point to anticipate new buying opportunities for swing trades specifically. The low 7Ks intersect the current bullish trend line, while the low 6Ks happen to align with the .382 retrace that is proportional to the entire bullish structure since the December low. It is important to REALIZE that this is NOT a prediction, only a point of reference.

Mindset is everything when it comes to timing markets effectively. We maintain an open and flexible mindset which means we accept that ANYTHING can happen. Bitcoin may not retrace to 7K and form a shallow consolidation that can squeeze to higher prices. This is the opposite of being "predictive" or "opinionated" or absolute in any way. Since the environment is now strongly bullish, it even makes sense to lean toward the aggressive side with setups that are much more risky. We just took such a trade off of a setup on a 12 hour chart, but exited quickly for a smaller loss.

In summary, Bitcoin is poised to go higher in the long term but that does not mean it won't correct slightly over the short term. It is important to put these potential corrections into perspective and for us that means in line with recent price structure, NOT based on chart structure from 18 months ago. The objective is to WAIT for setups that offer attractive reward/risk, it is not about "ACTION" or any other impulsive reason. Being passive and flexible is what allows for adjustments better aligned with the order flow or market intent. For this same reason, we are taking partial profits and reducing risk in many of alt coins in our portfolio. Buy wholesale and sell retail, it may be imperfect and imprecise, but it yields results. We prefer to be green over being right.