Bitcoin: Short Setup To 20K?

31 ก.ค. 2022

There is a short setup developing within a price location that is highly vulnerable to longs. If the broader structure stays intact over the coming week, it is within reason for price to test the 17K low again.

The short setup is based on the bearish pin bar that has appeared at the upper boundary of the 22 to 24K resistance zone. IF 23,500 is taken out, the short signal will become active. SWING trade risk can be defined at 25,500 while a reasonable profit target can be set around 20,500. The reward/risk is approximately 1.5:1.

Keep in mind: I DO NOT short Bitcoin. I have explained why many times. There are plenty of other markets to short that typically lead Bitcoin anyway.

If I think 17K can still be tested, why not try to max the profit? Because there is a greater probability that 20,500 can be reached and a profit locked in. While the broader structure continues to favor a test and break of lows, the longer you hold on for, the greater the risk you take in terms of time. Also in this less active environment, it is wise to lock in profits earlier IF price hesitates or generates a conflicting signal. The skill in this game is being able to recognize changes BEFORE they become obvious to everyone else. If you think in absolutes, are inflexible or refuse to accept the random nature, then be prepared to make a large donation to the market.

The broader price structure is what carries the weight and it has yet to be compromised. This is the case for the S&P as well. While the bond market may be showing some important signs of change, the economic environment (as it is being priced into the future) is not supportive of any sustainable rallies. FED continues to be in rate hike mode and is looking to curb the current inflationary environment, not support it.

The point is, there are still a number of environmental factors weighing on the market and until they are no longer in play, it is important to not lose sight because they serve as an important gauge for longer term expectations (and why you should stop listening to novices calling for BTC 50K etc.).

What can go wrong with the short setup if it becomes active? The short term momentum is bullish and may push further. Understand that bear market rallies are IRRATIONAL and are very confusing, especially for those who like to entertain themselves with "logic". Markets are not driven by logic, especially on the short term. They are driven by the irrational forces of greed and fear. IF price CLEARS the 24Ks, the 28 to 30K resistance becomes the next area to anticipate. This is particularly useful for those who employ smaller time frame strategies.

IF the 24K resistance zone manages to hold this week, the structure from 17K to 24K can be established as another lower high formation. Until that changes, that is the structure that I am using to gauge risk and potential on the swing trade time frame.

It is important to consider that NO ONE knows ANYTHING in this game. Markets are highly efficient which means they are nearly impossible to forecast on a long term basis. The sooner you ACCEPT that concept, the sooner you will learn to trust the PRICE, not PEOPLE.

Thank you for considering my analysis and perspective. I hope you find it helpful.