Bitcoin Break Out Or Fake Out?

Bitcoin still has a bullish argument BUT the risk is much greater at current levels. Here I'm going to provide the bullish and bearish scenarios for the coming week. How you choose to operate within either context is going to depend on your RISK tolerance and flexibility.

The Bullish scenario: while the 55 to 57K area is a notable resistance, price is lingering. Often price rejects resistance levels quickly. This type of price action can be interpreted as a sign of strength. The problem is, IF price can break higher out of this mini consolidation, how far can it reasonably go?

The trade idea would look something like this: Buy stop 56,500 SL 53,000 T1 60,500

While 3500 points of risk is lower than the average, reaching 60K from here (the next resistance) is going to require some serious momentum in order to clear the congestion around the 58K area. Reaching the mid 59K area would at least justify the risk and would be an appropriate place to begin locking in profits. This type of break out in my opinion has a lower probability compared to a double bottom or higher low setup.

The Bearish scenario: While price is lingering at a resistance, it is VERY possible for a failed high or failed break out to unfold from here. Often price will generate a buy signal (break out) which is then followed by a bearish reversal pattern of some kind (pin bar). IF this type of price action unfolds around the 56 to 58K area, that would be an appropriate time to exit longs, especially if a new long was just taken.

The bearish scenario is only describing a sell signal which can be followed by a healthy retrace, it is NOT to be confused with a bear market. IF price can retest the 48 to 50K area in the coming week, it would be a good location to look for a new swing trade long (once confirmation is in place).

Please keep in mind, I am writing from a short term swing trade perspective, I do not short Bitcoin and context is the key component of my strategy. If you are lured by hope, overly exaggerated analysis or enjoy being lied to, you can find that everywhere else on the internet.

This is a game of risk, probability and self control. If you can't understand and embrace the random nature of a financial market, over time your outcome will be no better than the result of flipping a coin. Improve your game by using chart information to recognize potential opportunities in advance, NOT to react to what is going on at the moment.

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