Bitcoin: 18.5K Break Scenario.

Bitcoin price action has produced numerous buy and sell signals that go nowhere. How best to interpret this? Objective answers come from price structure and context which I will explain in this article. Most importantly. In these situations, RISK must be accounted for on both sides of the market.

Bitcoin is consolidating between the 20,500 resistance and 18,500 support. All of the price action between these levels is nothing but random NOISE. If you are considering swing trades, it is more effective to focus on the consolidation levels and the RISK. Having an opinion, trying to “figure out” the next move, or listening to others (especially those with very dramatic emotional appeals) can be very costly in this situation.

Let’s now consider the risk. When prices consolidate, often volume is increasing on both sides over time. Meaning more and more participants are getting both long and short for countless reasons. When the market breaks one way or the other, half of this population will be wrong and forced out of their positions which is what often culminates into a dramatic break followed by price momentum. No matter what side you take, you need to be very aware of what “wrong” looks like to minimize getting caught on the wrong side of this.

The scenarios here are simple, how you manage them is not. IF 20,500 is cleared and price closes above it, a short squeeze to the 22K to 24K resistance becomes more likely. If you are taking the bullish break out long in anticipation of the squeeze, 18,500 becomes your point of reference for risk. Keep in mind the long scenario, while it is possible, it is still NOT favored by the broader price structure or economic context. This means profit expectations should be LOWER. There is not enough evidence to call this the bottom of Bitcoin. 17K and 14K are still within range.

IF 18,500 breaks, (which is FAVORED by structure and context), the bearish momentum should follow through quickly (like the next candle or two). Price targets are the low 17Ks and possibly 14Ks. Risk can be defined from the 20,500 level in this scenario. With the S&P sitting on lows and potential catalysts like NFP on the horizon, it is within reason to be more aggressive on this side.

As I remind my followers often, the skill in this game is not “being good at charts”, it is being able to recognize when you are wrong and adjusting to risk quickly and confidently. “Thinking” will only lure you into the herd mentality. This game requires a passive mindset, which requires that you LISTEN to the market. Embracing the random nature of the market should prevent you from operating with any opinions.

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