BTCUSD: Impulse Still Intact? Watch For Break Of 10256.

BTCUSD update: Price action is still being lead by bearish momentum, but the range of the most recent candles are tightening. Even though this may not appear as anything unusual, because of where it is occurring, we can get an idea of what is likely to happen next.

In terms of the wave count, and impulse structure, the Wave 1 high was 9074, and so far the current Wave 4 low is 9280 which means no over lap. As long as Wave 4 does not go into the area of Wave 1, the transition to Wave 5 is still very reasonable, especially since price is not much lower than the 9604 support level (.382 of recent bullish structure).

Buying into this type of price action in anticipation of the bullish reversal is aggressive, especially since there are no confirmations of momentum changing, only a tightening range which just acts as a heads up. The more conservative play is to wait for a decisive break and close above 10256 minor resistance level (.382 of current bearish swing). This level adjusts as price action pushes lows and serves as a gauge to determine when momentum is much more favorable for longs.

IF the current bearish momentum persists, and price pushes into the Wave 1 area, the impulse wave will be negated and I will view this market as being within a broader consolidation, which is not to be mistaken for a bearish condition. As long as price does not push new lows (below 6K) I will be looking for reversal patterns at the predetermined support levels to add to my long. The consolidation premise helps me to adjust my near term profit targets lower to the 11Ks which keeps my expectations within the boundaries of the market structure instead of optimistic targets based on feelings.

In the broader consolidation scenario, I want to see how price behaves within the 8171 to 7239 support zone (.618 of recent bullish structure). This is a predetermined support that over laps the 8171 to 4983 major support zone that is the .618 area relative to the entire bullish structure of this market. In range bound markets, broader supports AND resistances tend to hold and I will look to capitalize on that if it unfolds this way. This price action is NOT enough to change my over all outlook to bearish.

In summary, price is still in a good position to form a higher low and rally to the 13Ks. Whether you are position trading or swing trading, you must always be aware of where price is on the road map and what to anticipate if the condition changes. Less experienced traders get stuck on a "one scenario" idea, and get bent out of shape when the market does not comply. This focus on being "right" is irrelevant. Timing any financial market requires that we make decisions and take risks in the face of limited information. The only way to thrive in this type of environment is by learning to accept new information and adjust to it which forces us to accept that the market is always "right". The best we can do is measure, evaluate, compare and then decide if the market is in line with our criteria, enough to justify taking a risk, or not. This is why it is so important to follow your OWN criteria and use outside analysis to supplement your own, not to replace it.

Questions and comments welcome.