Short squeeze off the 18Ks back to 21K quickly. What does this mean in terms of the bigger picture trend and momentum? Before you listen to the novices calling for 50K, it is important to objectively consider this shift in terms of price structure within the context of the economic environment.
First, before you ask: "Isn't there a way to foresee such moves?". Answer: No. Markets are highly random which means there is no way to forecast them with any degree of accuracy.. While I have been writing about bearish signals and anticipating a test of 17K in most of my recent articles, I have been warning followers of the RISK and what can go wrong when selling into potential support areas, even when the overall structure favored a support break. Accounting for RISK is what prepares you for the possibility of such a short squeeze, whether it unfolds or not.
Instead of asking "why?" you should only be asking "where?" in these situations and adjusting your outlook to the new piece of information. Here is what I consider:
The broader structure (lower highs and lower lows) is still generally bearish over the long term. No major resistance has been taken out yet (25K). If you consider the economic context: trends in bond yields and the Dollar are still poised to continue higher which mounts bearish pressure on everything. This means any rally attempts in the stock market or Bitcoin (there is a correlation) have LITTLE potential or sustainability. That's the broader view.
The short term view (one month out): The large green candle off of the 18K area has taken out a minor resistance at 20,500. This means the recent bearish movement off of the 25K peak is no longer in play. Momentum (NOT to be confused with the broader trend) may be bullish. Such a shift can lead price REASONABLY back into the 23 to 25K AREA RESISTANCE. IF this resistance is cleared, then 28K becomes a possibility. This is the same story for the S&P (correlation). Bear market rallies can happen and it is very important to recognize their limited potential and risks and not get carried away with hype.
IF Bitcoin produces a new sell signal somewhere between 23 and 25K, it would still offer a short swing trade opportunity with a more favorable probability. Again that is "IF". On the other side of that, IF a bullish momentum continuation pattern appears somewhere between 20 and 21K that can offer an aggressive counter trend swing trade to the long side. The short idea is on the side of the broader trend and is still more favorable, while the long idea can help to capitalize on a bear market rally of limited duration.
Was I wrong about the 17K test? The market made an attempt and never got back to 17K. It was a potential scenario that was possible but the market does not agree with. I don't pretend to know more than the market like every one else. I respect it and adjust. Now I look for a test of the 23 to 25K resistance area and see how price behaves IF it gets there.
Thank you for considering my analysis and perspective. I hope you find it helpful.
Thanks man! I've never been through a bear market myself and I cling on your insights to navigate this one. Really appreciate your no-nonsense analyses!
Jamsie1
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18.5k seems like a close enough test of 17k to me, which is what you called as far as I'm concerned.
simplejoe1
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makes alot of sense. thank you. just shows how difficult trading truly is
MiamiCEO
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I bought ETH right after this post and we're pumping hard! Thanks for the heads up.
But when will you stop ignoring the fact that Ethereum is outperforming Bitcoin by a significant amount from the lows. Even though it tends to follow a similar pattern as BTC, it is on an overall uptrend compared to BTC which has mostly been flat from the lows. :) BTC has no real use case while ETH has several with the most developers behind it.
Free_Loader
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@MiamiCEO Ignorant much? Ethereum by market cap is behind BTC, hence its position as “a follower.” ETH is only “pumping” because of “the merge” and is nothing but news and expectation-driven, nothing else about ETH has changed. There’s otherwise no news backing BTC hence it’s not outperforming another crypto where there’s SOME news backing it.
By the same token, ETH could also be considered obsolete like BTC as there are many other blockchains that outperform ETH in speed, cost (biggest issue it has, hence the “merge”), and ease for developers. Instead of arguing about use-cases, it’s probably best to assign each crypto a proposed utility (these are speculative assets), and move on.
Finally, there were quite a few crypto busts this year, so there’s no certainty the shift to POS for ETH will succeed. (Luna, Celsius, Persistence, come to mind of recent failed cryptos). Errors in the migration to POS can arise within days or weeks, so there’s a lot of risking banking on ETH at the moment.
MiserableToppings
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@MiamiCEO, BTC use-case long-term is a store of value comparable to gold that also functions as a currency. ETH is the app-store currency for web3.0. They are separate and do not compete. There are arguments on either side for which one will have the larger market cap in x years.
Looking forward to seeing your Livestream on Monday.
ender01
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As always, I appreciate your posts
marbobsix
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With all due respect, there are trading strategies based on harmonic ratios that can certainly give an idea of where prices could navigate before they occur. Please see refence below, price and time projection for the momentum shifting