Bitcoin: 17K Low Test This Week?

Bitcoin managed to stay above the 20K level for the week which means I am not going to consider the previous test of 17K a major support break. This also means I am NOT going to relabel the wave count from a Wave 4 to a Wave 2. Keep in mind, just because price managed to stay above 20K over the previous week does not mean it will hold for the coming week. In this report I will go over the potential bear market rally scenario.

Bear market rallies are very deceptive mostly because they are accompanied by extreme hype, irrational nonsense and lots of HOPE. Do not be fooled. While price has managed to recover relatively quickly off the 17K low, it has YET to compromise ANY significant resistance levels.

As I wrote previously: The 22 to 24K is a minor resistance and a potential area for aggressive SHORT signals if one appears (see blue lines).

The 25 to 28K resistance is much more conservative and much less likely to be reached. IF price manages to get into this zone, and produces a sell signal, it would offer a higher reward/risk shorting opportunity. While I recognize the bearish potential and opportunity, I still do not short this market and I am not about to start now.

Bear markets are hard for most traders and investors because these environments require much more objectivity. The typical retail trader will usually perform better in bullish markets because they can get away with "hoping" their positions back. Hope is NOT a skill and does not pay the bills.

What often drives rallies in a bear market is short covering which is TEMPORARY and NOT a solid fundamental reason. Bitcoin is FAR from reflecting any long term bullish structure and IF a lower high is established around the low to mid 20Ks, then a lower low is likely to follow. That means a test of the 17K low is still a very high possibility over the next week or two.

Keep in mind a rally in a bear market can also be VERY irrational and go much further than one would "think". An OPEN mind must be maintained which means NO OPINIONS. Evaluate structure and levels along with some broader context. The general economic environment (context) is a LONG WAY from anything that would be inviting for new money to join this game. It can take at least a year or more before the environment becomes attractive again for the type of order follow that would provide for sustainable rallies

One good thing about a bear market: it is a good time to educate yourself. Bull markets promote bad habits while bear markets will teach you about risk. Take your time and learn.

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