This is just a separate post showing an idea I've been throwing around for the last couple of weeks. I noted the possibility in one of my recent writeups, but it wasn't very visible. Anyway, I'm seeing a lot of posts on here about the next wave down to 1.3K or at minimum a retest of the 3-4K zone. Even the bullish posts show pretty limited upside. This is why I'm putting this out there. The possibility hinges on the idea that the March 12th liquidity event was enough to cause a major squeeze upwards.
This would make sense from a purely psychological standpoint, if I'm just going to ignore the fundamentals driving the market for a minute. I've held off on posting something like this, simply because I thought there was a significant chance we'd see bears take control before the weekend. Instead, price action is looking very similar to the recovery in early 2019, but this time we've actually recovered from those lows much faster. Sentiment wise, things align perfectly as well. I'm seeing some spot sellers attempting to push the price down every time Bitcoin gets to the 6800-6900 area. These small selloffs keep making higher lows, while they're eaten by natural demand from the market. These are either people trying to protect their shorts, or just people getting out of the market because they believe Bitcoin will head to new lows. This indecision has led us to form a triangle with a downtrend that extends all the way from the February peak. In my experience with this market, these downtrends are meant to be broken.
Here's price action from the bottoming period in early 2019, where you can see that the bearish wedge was a big possibility at that time as well.
Here's the current 4H chart showing that BTC is close to breaking the 200 MA. You can also see how this could easily be either a wedge or a bullish ascending triangle.
Another thing to note is that Bitcoin dominance is dropping again, and major alts are looking fairly healthy for now. Normally in this market, these things show strength rather than weakness.
Of course, betting lots of money on a scenario like this, particularly with leverage, would be a bad idea. Even if we break out of this purple triangle, there's a lot of resistance overhead. I do think price can shoot straight up though, considering the liquidity has been tested heavily in this large range between $3K and near ATH levels ($13.8K). A break above the range and towards a new ATH isn't out of the question either, considering this may have been the final shakeout before a new bull market (as we saw in 2015). The volume experienced due to the panic on March 12th was certainly enough. Additionally, during true reversals, hardly anyone calls it correctly, and many are left behind. That's what incites the next major market cycle.
On the bearish side of things, I wouldn't really want to see a break below the 200w MA again, and conservatively I think below 5600-5800 would invalidate the bullish picture. In particular, I'm watching the triangle I've drawn (purple). It's not comforting that Bitcoin is finding resistance around $7.2K, so it makes sense to be wary of significant downside, particularly in the midst of an economic collapse that removes a lot of purchasing power from the everyday person. But, as I've hinted at before, the everyday person doesn't really matter in markets anymore. It may not matter how many people lose their jobs. It's all about the people with deep pockets, and what narrative they want to push. It would be hard for big money to justify holding stocks for failing companies, but it wouldn't be hard to justify holding "digital gold." It would only increase their power more. And I'm not even saying a huge price bump for Bitcoin here would be a good thing.
This is not financial advice. Just wanted to get this out there for my own use. This is for speculation, education, and entertainment only.
Linked below are some of my favorite Bitcoin calls to date, including the bottom in early 2019 and the top in June.
-Victor Cobra
This would make sense from a purely psychological standpoint, if I'm just going to ignore the fundamentals driving the market for a minute. I've held off on posting something like this, simply because I thought there was a significant chance we'd see bears take control before the weekend. Instead, price action is looking very similar to the recovery in early 2019, but this time we've actually recovered from those lows much faster. Sentiment wise, things align perfectly as well. I'm seeing some spot sellers attempting to push the price down every time Bitcoin gets to the 6800-6900 area. These small selloffs keep making higher lows, while they're eaten by natural demand from the market. These are either people trying to protect their shorts, or just people getting out of the market because they believe Bitcoin will head to new lows. This indecision has led us to form a triangle with a downtrend that extends all the way from the February peak. In my experience with this market, these downtrends are meant to be broken.
Here's price action from the bottoming period in early 2019, where you can see that the bearish wedge was a big possibility at that time as well.
Another thing to note is that Bitcoin dominance is dropping again, and major alts are looking fairly healthy for now. Normally in this market, these things show strength rather than weakness.
Of course, betting lots of money on a scenario like this, particularly with leverage, would be a bad idea. Even if we break out of this purple triangle, there's a lot of resistance overhead. I do think price can shoot straight up though, considering the liquidity has been tested heavily in this large range between $3K and near ATH levels ($13.8K). A break above the range and towards a new ATH isn't out of the question either, considering this may have been the final shakeout before a new bull market (as we saw in 2015). The volume experienced due to the panic on March 12th was certainly enough. Additionally, during true reversals, hardly anyone calls it correctly, and many are left behind. That's what incites the next major market cycle.
On the bearish side of things, I wouldn't really want to see a break below the 200w MA again, and conservatively I think below 5600-5800 would invalidate the bullish picture. In particular, I'm watching the triangle I've drawn (purple). It's not comforting that Bitcoin is finding resistance around $7.2K, so it makes sense to be wary of significant downside, particularly in the midst of an economic collapse that removes a lot of purchasing power from the everyday person. But, as I've hinted at before, the everyday person doesn't really matter in markets anymore. It may not matter how many people lose their jobs. It's all about the people with deep pockets, and what narrative they want to push. It would be hard for big money to justify holding stocks for failing companies, but it wouldn't be hard to justify holding "digital gold." It would only increase their power more. And I'm not even saying a huge price bump for Bitcoin here would be a good thing.
This is not financial advice. Just wanted to get this out there for my own use. This is for speculation, education, and entertainment only.
Linked below are some of my favorite Bitcoin calls to date, including the bottom in early 2019 and the top in June.
-Victor Cobra
Comment:
The buy signal here was the break above the 4H 200 MA (blue). Bitcoin will need to break above this area to prove we're not in a bearish wedge. Volume looks a little hesitant, which could mean the real push up hasn't quite happened yet. We could get a short term pullback soon towards the 6700/6900 zone to perhaps shake out some latecomers. But if we can break the 7300-7500 resistance zone, I can see a squeeze all the way up towards 9100-9300.
Comment:
Since it didn't link with the original post:
Where I called the bottom in early 2019
Where I called the top in June 2019.
Where I called the bottom for ETH/BTC last summer
Where I called the top in Bitcoin dominance
Where I talked about why crypto may not actual solves the problems it was built for
Where I called the bottom in early 2019
Comment:
Still in the wedge here. The pink line shows that we could be in a smaller, steeper wedge, which shows some potentially pent-up upside momentum. The 4H Ultimate Oscillator is also showing a higher low. Decent setup for some upside here. The bigger wedge support is now near 7100, so I wouldn't really want to see a sustained, high volume dump below there.
Comment:
On the bearish side, I can still see a shakeout take us below the wedge support to test the 4H 200 MA, around 6600.
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Bitcoin has broken above the previous bearish channel resistance again (orange)
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If alts are to be used as an indicator, they broke ABOVE their own wedge already and are now in a larger bullish channel of sorts. They're also currently in the major pivot zone between 70-80B. That's the level of control for alts. Bitcoin has yet to make it back into its control zone, which is actually closer to the 8-9K area.
Comment:
Zoomed out, you can see how important this zone of control is for alts. If they can't hold within here and sustain bullish momentum, I think it's possible we see another big drop.
Comment:
Pretty strong zone of control for Bitcoin as well here, actually.
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The weekly charts all show a lot of upside potential, based on the UO (red at bottom)
Comment:
Dominance still looks bearish:
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Crypto still clearly outperforming stocks.
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It's also possible to draw the wedge where bitcoin has already broken above it (without wicks).
Comment:
Here's the wedge where we still haven't broken out. It points more aggressively to the upside, since the top slope isn't that extreme.
Comment:
It looks like we're breaking down out of the wedge. Bulls look a bit weak here. It's possible the stock market bounce is over, and if BTC dumps back below 6800-7000, I think it's fairly possible I will have to abandon this idea.
Comment:
On a positive note, the 100 Day MA just crossed above the 200, for the first time since May, 2019. That may not matter if global markets decide to make another leg down.
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If we fall here and break back below the light blue channel, I can see a fall straight down to the bottom of the channel again, around 4900.
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Actually it looks like we're resting right on the wedge support.
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Another thing - On-balance volume continues to rise for the crypto space, especially for altcoins. Classically, this "should" mean that smart/institutional money is continuing to buy at these prices.
Comment:
Pretty strong reaction here, bouncing right on the downtrends from both the June 2019 top and the recent $10.5K peak. If we continue to bounce from here, that would be incredibly bullish. A sustained break back below both of those downtrends would probably negate any bullish picture in the medium term.
Comment:
Zoomed out, with some updated bearish and bullish targets. Bullish - 9300, 10800, and 12100. Perhaps even 16000. Bearish - 5800, 4800, 3700.
Comment:
A main downtrend since 10.5K can also be drawn like this, which shows that this is where we found resistance recently.
Comment:
Bitcoin is now above the downtrend. If it can hold here for another day or move up, that would look good, particularly with the 9d MA crossing over the 50. However, a strong break back below that resistance would look more bearish.
Comment:
How about that? My potential targets are actually within reach. Seeing some worrying signs from altcoins, but that can also mean that this Bitcoin rally has some strength behind it.
Comment:
The first major resistance on the original chart was around 9300. That's right near where it got rejected :)
Comment:
Ultimately, this idea ended up being correct, since Bitcoin tapped the $9.3K-$10K zone (lower targets). For now, it's sustaining above $9.1K, even on the weekly. This is a good sign. A break back below $9.1K on the weekly could mean Bitcoin needs to test the $8K level again, or briefly below at $7.7K.
