Overview:
We continue to remain bullish on Bitcoin' though many are calling for another leg down. In the broader perspective of the market the trend is still bullish and assuming we have completed wave IV' and entering wave V' going back to 2012 we believe there is opportunity for a new all time high before another major correction.
Technical:
We have the beginning of a clear fractal count which we at this time are assuming is the first wave of the broader 5th wave count. Currently support has been found at the 0.618 level of wave iii' and we are looking for a bullish reversal signal prior to entering a positional long trade. Those looking to add early before confirmation should use the 9070 level as a stop area as a breakdown of this level would negate the current count. I can not emphasize enough that in my opinion active trading corrective markets is risky and one should understand the risk and have tight and skilled money management in place. It is not about being right or wrong but managing your money to minimize losses.
Shorter term levels of importance are 10339 and 10913 which are the 0.318 and 0.618 levels of wave iv' and 11802 which is the previous top and also a longer term support and resistance level. We maintain our shorter term positional trade target level between 12974 and 13301.
Hidden Trend Lines:
Ignoring the extreme tops there is an upper bearish trend line which has become support for the current breakout. Not all trend lines are equal. Two points are often misconstrued as a trend line and though it can be used as an upper or lower resistance level, we are looking for more than 3 to 4 points to determine the "true trend" and consider the breakouts either noise, or a failed breakout. This is purely subjective as is most Technical Analysis.
One thing that many are good at is pointing out the obvious. Everyone has the upper light blue "trend line" on their chart as a trend line. Other than it being two tops these two points do not form an overall trend of market sentiment. You can see clearly that the current bullish move did not test this resistance area. A trend line to me is multiple points where a top, bottom, or consolidation occurred giving us a perspective of the current sentiment of the market. Often finding a hidden trend line that no one else is looking at can be the difference in following the herd and following the market, or looking for an edge on the market and where longer term money is positioning itself in lieu of shorter term traders. I'm not looking for the obvious trends and patterns I'm looking for those hidden trends that are more indicative of market sentiment.
Clearly the bolder blue trend line is more indicative of resistance and support levels throughout the correction. Currently this trend line has been broken and has provided support of the recent pullback. This is also happening at a critical level from the recent bullish swing. As I have already added a position prior to the market bottoming I am going to exert patience here and look for a signal to validate a bullish reversal before adding another position.
Bottom Line:
Seeing the obvious is easy, finding those signals or trends that provide an edge over the average trader is what separates great traders from average. This takes time and effort, and if you are looking for the obvious, you often overlook the factual. The chart speaks to us, it is our jobs as traders to decipher the chart and look for an edge the majority of the market is missing. This is often the difference in following the herd as they are led over a cliff', or seeing a hidden path to brighter pastures that were left uncovered.