Bitcoin: Structure Still Says Strong. 4K In Sight?

Bitcoin update: Price continues to hold up and is now taking out the minor bearish trend line that has been in place over the previous week. It is nothing to get overly excited about, BUT it does add to the argument in terms of further strength. This entire space is not exciting enough to attract a constant flow of new money, so it needs surprise news or catalysts in order to make any significant progress. This limits the effectiveness of technical analysis but does not render it useless.

The news about the SEC's comment about an eventual "ETF" and now JPM's creation of their own currency are certainly positives for the future of this space. And judging from the recent price action, again the short term patterns may not be very reliable, but the broader structure is.

After the news spiked the price over a week ago, it has been lingering lower, but not decisively so. We have been explaining to our followers that as long as Bitcoin does not give back the gains made by the large bullish candle, strength persists. Even in the face of increasing short interest.

We carry long term inventory and a short term swing trade. In order to be in on the next leg up, you just have to be in and wait for the next news item to come out and surprise the herd. Bitcoin is a very emotional and ignorant market and the smart money knows it. And they use this to their advantage with the use of market moving information timed at their convenience.

Just from my observation, there are many examples of analysis all over the internet that over complicate this. Perhaps they do this in order to attract attention since "more is better" appeals to the majority of investors, traders and gamblers.

For us, the situation is very simple: Either Bitcoin takes out the 4K resistance area upon its next catalyst, OR it takes out the 3350 area support. Based on recent structure, price appears to be poised to go for the 4K but we also know that ANYTHING can happen. Some news item can appear out of no where that sparks a push to 3250. You cannot predict these events, but you can prepare.

In summary, when it comes to timing any financial market, everything is about "IFs". IF Bitcoin pushes into the low 4Ks, we have profit targets in place to capitalize on the move. IF price takes out 3350, we will be stopped out of our swing trade, and we then wait for the next setup to get back in. IF price takes out 3250, we step aside until stability can reestablish itself. That is our plan in a nut shell.

Market timing is about having a process and following it. Our process considers many variables, and we make every effort to simplify each step in order to minimize indecision. There comes a point where there are compelling reasons to still be in a trade, and when there are not. At the moment, Bitcoin still provides a compelling argument for longs even though price appears to be static for prolonged periods.

Even though this is a primarily event driven market, that doesn't mean charts are useless, it just means you need to recognize the value behind the subtle clues that are still available. Do not make it more complicated than it is: higher lows often lead to higher highs.