Bitcoin could not break the 45K resistance over the previous week. This establishes a lower high consolidation and increases the chances of a lower low to come. The recent price spike was nothing more than a REACTION to geopolitical drama. The fact that the bullish move was given back just as quickly implies that there is NOTHING supporting this market, especially in the face of a rising rate environment. Here are some scenarios to consider for the coming week:
1. Bitcoin establishes support at the range low (35K) and confirms a reversal. This would be ideal for a SWING trade. It would be aggressive because it is going against the mid term structure which is bearish. While the long term trend is still bullish, the current environment does not favor any kind of spectacular rally any time soon. This means profit potential and expectations should be very CONSERVATIVE. (Anything over 1:1 R:R is a WIN).
2. Bitcoin breaks 35K and tests the 33 to 30K support area. The mid term structure favors this, but there is never a guarantee that this will play out. If you are into shorting BTC, selling into the 35K support in hopes that it breaks is a VERY high risk position because price can easy find some buying activity for any reason. Short risk was MOST attractive at the 43 to 45K resistance, NOT the 35K area. Playing the breakout to 30K is plausible but my point is: you still face high reversal risk and must carefully monitor and be prepared to get out if a reversal appears. Keep in mind the 35K to 30K area is a very conflicted location because of the broader trend support levels here.
3. Bitcoin gyrates between the 38K and 40K area and lures more reactive traders. Short term structure is range bound in the mid point of a range is the MOST random location. In these situations it is more effective to either anticipate to buy the range low or sell the range high. Anything in between is the equivalent to playing a slot machine.
Why do markets go higher or lower? If you attempted to answer this question with a logical explanation, your thinking is flawed. The effective answer is: WHY does not matter. Attempting to figure out why focuses your attention on irrelevant information. Focus on looking ahead and asking WHERE price is more likely to act in a particular way. And MORE importantly, how to quantify the RISK at such a location.
Thank you for considering my analysis and perspective, I hope you find it helpful.
upvoted to support you. great overview and chart. here's my latest update for BTC
B-17
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Thanks for posting your thoughts on the chart.
I think why is a good question for a tempered, almost philosophical mind. Most traders do not fit this description. Otherwise, I think it's better for most people to listen to smart investors describe their 'why'. Bill Miller, Paul Tudor Jones, and Stan Druckenmiller all come to mind.
On the trend, I am not sure the odds are better than 50/50 Bitcoin puts in a lower low without the Geopolitical environment worsening. It looks like there is also a clear double bottom and an inverted candle on the weekly chart. The trend has definitely been bearish, but I think the odds of a reversal are climbing, barring Macro events going towards WWIII. All markets are on edge right now.
mr_lu
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@B-17 This is a tough call. Some say that due war, there is a big outflow of capital to gold and commodities, once there is some solution to the conflict at sight (imho not likely in less than weekS, more likely even in monthS), the money will come back, hence the prices will go up. Others say that even before conflict started, there was big outflow due to fed curbing the inflation, which was caused by all that money printing, which caused overvaluation of most assets, which needs to correct to more saustainable levels … Regardless which way markets are going to pick, it seems like ANYTHING BUT the easy ride which the 2021, in retrospective, was. One thing seems to have been proven by recent events though: when the REAL rockets start flying and REAL ppl start dying, the prices of REAL gold and REAL food go up. BTC is obviously still considered just yet another speculative assets and not real “safe haven” or “digital gold.” Might happen in future, hy not - but obviously we are not there, yet.
B-17
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@mr_lu, This response is so thoughtful. I really like the way you're thinking and expressing your ideas on capital flows and market behavior. Its probably helpful to think about time horizon. I'm about 5 years into owning and averaging into Bitcoin, with average cost around 10K, and I am more focused on the next 5 years or longer. In my holding period, I think Bitcoin has earned its keep and performed much better than Gold, or 'safe haven' assets. So, it depends on your time frame.
Thanks again for being thoughtful.
Ahmedramzy81
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@mr_lu, if you come to a country same my country Egypt which is apart of the world and ask people what is Bitcoin? Probably you will get less 10% who can recognise and less than 0.1 % who already hold Bitcoin, on the other side every single soul know what is gold and 90% of occupation owned it with different values. So it's not fair to judge the 1000000 year old gold with the 10 years old Bitcoin . And although this unfair comparison the Bitcoin is hold soooo soooo strong .
mr_lu
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@Ahmedramzy81, well, i wrote "might happen in future, why not - but we are not yet there." TRUST in the value of an asset is the reason why ppl are willing to pay for it or to hold it - for ppl on Pacific island of Yap, the big stones hold the value, so they use them as mean of economical exchange. Everyone else outside this island sees only big circular STONES. The islanders see VALUE. As you mentioned, very few ppl see VALUE in btc at this moment. MOst of them see nothing. This will slowly change. Then btc might even function as "digital gold". But - as I wrote - we are not there yet.
gsimoni
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Great stuff Marc! One cannot doubt you perspective! Thanks for caring!
NoOneWhoIsSomeone
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Great perspective, thank you!
amirmehrabi
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crazy how none of the 3 general scenarios happened. thats bitcoin for ya
here's my latest update for BTC