BTCUSD: Short Squeeze In Progress. 6941 Test Possible?

BITFINEX:BTCUSD   Bitcoin / U.S. Dollar
BTCUSD update: 7240 low which was the lower boundary of the minor 8171 to 7239 support zone was established and followed by a very bullish pin bar . The current candle has taken out the high of this pin bar which is a bullish sign. What needs to happen now is the follow through. Without it, price can still retest 7239 or even 6941 before the reversal process is complete.

Like I wrote in my previous report, do not react, instead plan ahead. The current location is a very attractive area for buyers. In fact, if you were watching the order books on the some of the major exchanges while price was flirting with the low 7Ks, there was a huge discrepancy between the pending buy orders and sell orders. There were was something like 30K to buy and 8K to sell at one point while short interest was declining. This was visible as price was going lower which clearly signaled that the smart shorts were getting out while the weak longs were being scared out. No new shorts were entering the market. This was a clear sign that a short squeeze was imminent.

Buying in such a situation is tough, especially if you are managing a larger position already. Do not fear though, because if this is the beginning of the next broader bullish move, there is still plenty of opportunity to participate at an attractive reward to risk ratio.

The key to bullish continuation is how the next few candles unfold. The fact that 8300 was taken out quickly is a sign of strength, and that could have been used as an aggressive buy trigger. The problem is, price is hesitating when it should be pushing higher. This hesitation may lead to a retest of the 7401 reversal zone boundary or even 6941 with is the next reversal zone established by the 7239 low. It is also possible that the market presents a shallow higher low. All three of these scenarios offer buying opportunities IF new reversal candles or inside bars appear at these levels.

In summary, the bigger picture carries the most weight. It also allows you to plan ahead when you are able to project relevant support and resistance levels. These locations give you a reference point to anticipate, and prepare for reversal patterns and triggers, not to blindly jump in. Just like the market highs are very risky for longs, these market lows are very risky for shorts and attractive for longs, especially for position and swing trade longs since the potential move off of this area can lead to the mid 9Ks with relative ease. The question you must ask of yourself is how much can you risk? Choose an amount, and then split it up into smaller units. This allows you to distribute your risk across levels of aggressiveness. You can allocate part of your target size toward aggressive entries (break outs), while allocating other portions to more conservative entries (pin bars off of reversal zones). Remember this is not a casino, manage risk and the rewards will take care of themselves.

Comments and questions welcome.
Marc Principato, CMT |Author: Analyze Any Financial Market Like The Pros Using Price Action| | Cofounder (S.C.)

Here is an update to this idea. Please note I invite questions, but I do not have time to answer at the moment. The community members do a great job of answering many of the questions, so you can look for answers that way. Keep in mind, many answers can be found on my other site as well which is where much of my attention is at the moment.

On the updated chart, you will notice has touched 9K. In my 12 HR chart update, you will notice the inside bar (circled in green) which was one of the situations I mentioned in my previous reports. That is what a shallow higher low looks like. This does not mean price is immune to retracing and in order for me to add to my position trade long, I am preparing for the 8400 support (.382 of recent bullish swing). IF the bullish momentum is going to stay intact, and price retests this level, I am expecting it to hold and reverse higher.

A break below and price can retest the mid 7Ks again, which are the extreme support zones. I will be looking for long signals if price returns to that area as well. The minor trend line on this chart serves as a momentum guide. If price closes below it, that signals a retrace is in progress and that is when I will focus on the established supports for reversal confirmation.

I am not anticipating new lows and will continue to look for opportunities to add to my position trade long which I am looking to selling a small portions of in the 10Ks.
Lower highs and lower lows no?

The whole thing looks anaemic to me ... have a nice clip of cash ready to go at much lower levels. If I miss the bottom then so be it ... definitely worth waiting for one more move to the downside.
+1 Reply
yep, no volume and we should go down a little deeper for more power and jump up, below 7000?
+4 Reply
this analys was better. LIKE
VanBenno brecier
@brecier, that's one long range prediction. You got a crystal ball? I'll be looking out for this inverse h n s. But calling it this early is damned ballsy.
@MarcPMarkets "there was a huge discrepancy between the pending buy orders and sell orders. There were was something like 30K to buy and 8K to sell at one point while short interest was declining" Where do you see this data?
+3 Reply
@evanp90, I am assuming Marc is looking solely at Bitfinex. The buys and sells volume can be seen on the exchange page.

If you type USDBTC into the search bar on trading view USDBTC SHORTS and USDBTC LONGS should appear as an option. I keep those charts in my watch list. If you go through the charts and relate the changes in volume on the shorts to price action on the USDBTC price chart you can see how price action effects the volume of short positions open. It's not a solid stand alone indicator but another indicator to be used in conjunction with a group of indicators.
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