Bitcoin has been stuck between 28 and 30K for over a week. There have been numerous buy and sell signals that don't follow through. What to make of this price action? And what is reasonable to expect for the coming week?
On Monday of the previous week, I actually shared a swing trade short signal with followers. I made it clear that I was NOT going to take the position myself since I do not short Bitcoin. Price is still gyrating around the entry price of 29,200. Since the entry, price has been as low as 28K which offered some profit, but no where near the profit target. I mention all this because it is a common situation that traders can find themselves in and would rather hope for the best than reevaluate risk and make adjustments.
In this situations, you MUST place the most weight on the broader CONTEXT, NOT the price action at the moment. NOTHING has changed in terms of the broader context. Short term price structure is still BEARISH. While a lack of follow through on the sell side can be interpreted as a sign of hidden strength, it does not amount to much in terms of taking risk on the long side because of the overall LACK of potential in this environment. Lack of potential is something you CAN'T SEE but can be gauged by price structure and levels.
The 32 to 34K area is the key resistance that needs to be CLEARED in order for Bitcoin to PROVE that bullish momentum is more sustainable. Otherwise any minor or quick movements between 28 and 34K is MEANINGLESS in light of the bigger picture. The reason is: the 34K area is a lower high and lower highs usually lead to lower lows UNLESS the market changes. This is how I let the market TELL ME what to think.
For those who are short from 29,200: You can reduce the overall risk by tightening the stop to 30K (chance of stop out is higher), you can exit now for break even or small loss and cut risk completely (lack of momentum is not a bad reason for such a choice). Or you can bet on the side of the overall structure and let the position ride until the full stop is reached. This choice is a function of your OWN personal risk tolerance, NOT a signal on the chart (NOTHING has changed). Keep in mind a bearish catalyst can come out of no where and next thing you see is price pushing the 28K minor support. IF 28K is cleared again, a test of the 25K support becomes much more likely.
What about the movements between 28 and 33K for those who don't have the patience to sit through price noise? A 5K point range can provide opportunities for those who are operating on the smaller time frames (day trades). The thing is, if you are unable to navigate the larger time frames and recognize the broader probabilities (which is EASIER), what makes you think you will do better on smaller time frames? While the technical risk may be smaller (if you respect it) the random element is even greater.
Human nature is our greatest liability in this game. The sooner you recognize that, the sooner you will change your focus from chasing profits to protecting them. Stop trying to "think" where the market will go next, and instead accept the RANGE of possibilities while always maintaining an OPEN mind. Markets are highly random, profits are highly random, RISK is the only factor we can CONTROL. Identify reasonable scenarios relative to your chosen time frame and then evaluate the risk. This process should be done BEFORE price action presents an opportunity.
Thank you for considering my analysis and perspective, I hope you find it helpful.
Thank you Marc, for the added effort of giving us the “long” version of your report. Always appreciated.
AlanSantana
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But we have many bullish signals.
- The SPX went ahead on Friday and we know that Bitcoin and the S&P 500 index are correlated. - We see Tether Dominance going bearish (USDT.D and BTCUSD have an inverse correlation). - We have a higher low compared to 12-May. The bears couldn't push prices lower. - We have many bullish signals short-term.
We already had 2 months of straight down bearish action. The market is asking for a relief rally... A relief rally is already taking place.
Thanks for the work you do.
Namaste.
Free_Loader
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@AlanSantana You’re talking absolutes as if they’re set in stone going forward. Who’s to say a relief rally is due? What kind of reasoning is this or is behind a statement like that. The market doesn’t have do or give anything because you FEEL it’s oversold or overbought. Just because 2 months are up doesn’t mean it’s time for a bullish wave. Ridiculous. The S&P could go to 3200 tomorrow if the right catalyst came along, say China invades Taiwan? Relief rally or not, it’s just THAT -something to make you and others playing the game feel a little better about your investment.
The chart signals clearly point to what I am telling you.
China invades Taiwan can be either bearish or bullish... Who knows but this is just your imagination.
The facts are different and I mention in my previous comment.
The market is bouncing and that's a fact.
We started predicting this since May 22, you can visit my profile.
While China invading Taiwan... Really? How will that affect the market?
Can you really TRADE based on that? Just a random assumption you make.
Maybe it becomes something extremely bullish like the war with Ukraine.
Just saying, guessing and thinking about doom and gloom scenarios is not the best strategy to trade.
Namaste.
simplejoe1
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@AlanSantana, layoffs are coming as companies run out of cash. gasoline and costs are soaring and this will likely take its toll over time
jamjar61
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@Free_Loader Trading is a game of probabilities, there’s many reasons to get involved at this level; descending channel and double bottom at a major monthly consolidation level, bullish divergence, weekly hammer and also low test wicks on the weekly, so this is pretty high probability
simplejoe1
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@jamjar61, yeah but it all coincides with the rally in the s&p. if that takes a downturn you can throw all your indicators out the window - btc is going to crash
biasedsenpai
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@simplejoe1, These people still don't understand that BTC depends on the stock market. They think it's going to magically pump to 100k.
Free_Loader
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@jamjar61, The technical trader (you and the word salad you just mentioned), always gets fleeced. Computers and derivatives run the market, not hopes and dreams. Let's see what happens.
simplejoe1
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@Free_Loader, notice the ridiculously low volume in this breakout. zoom to daily chart