MarcPMarkets

BTCUSD: 6K Level Is Attracting Buyers, But Is This The Bottom?

BITFINEX:BTCUSD   Bitcoin / U.S. Dollar
BTCUSD update: Price is attempting to stabilize just above the 6K low which is a very important level for this market. It just so happens that the buyers are entering around the reversal zone boundary which is not uncommon. This is a very attractive area to accumulate a position, especially if you have been out of the market waiting to get back in. Is this the bottom? There is no way to pin point it, and since momentum has not changed back to bullish , it is still within reason to see price test 6K or slightly lower before a major reversal unfolds.

On this chart, I manually created a symmetrical triangle that has a base at the 6K low. For me, this is a visual cue of what the bottoming process looks like. There is no precision to this, it is a cue that highlights how much time there is between the lows. As you can observe, there is over a month which for me points to the fact that selling is relatively slow, and more than likely there is more quiet accumulation going on here. This is what broad market bottoms look like in general.

Can price go lower? Yes. Consider where price is. The 8171 to 4983 support zone (.618 of entire bullish structure from the 150 lows) is a wide area where there is a higher probability of price finding stability. So price can reasonably go below 6K and will still be within this zone. Beyond that, there is a reversal zone boundary at 4560 which is relative to the 6K low. So in an extreme situation, price can push into this zone, scare everyone out, and still reverse sharply. These levels help to put these extreme moves into perspective and help you to anticipate what "should" happen next IF buyers are returning to the market. IF price closes below 4560, and does not reverse over the next candle, that is a sign of a much more serious problem and where I sit back and do nothing until the market proves stability again.

Often people are confused when it comes to buying now at great low prices or missing these prices in exchange for the market moving more favorably once they are in. This is a trade off. Buying lows in a weak market is a tough game to play, but it is not a bad idea as long as you are careful with your sizing, NOT using margin, and believing in the long term outlook of this market. Keep in mind, if you thought this way at 10K, and bought too much, you now know why I keep emphasizing careful sizing and risk management. It is what I like to call the inventory game, which means you are cost averaging into a market that should come back in the long run. If you would rather forfeit these lows and wait for momentum to be in your favor, then you must wait until price closes above 7581 (.382 of recent bearish swing) . That would be the first sign that momentum is changing back to bullish .

In summary, this market has been drifting lower but relatively slowly in my opinion. You can capitalize on this situation and accumulate small positions and continue to add if this market reverses, OR you can take the more conservative route and just wait until the bearish trend lines are compromised. Either way, as ugly as these markets look, I have no interest in being short because for one, I do not trade these markets on margin, and for two the risk of getting caught in a short squeeze is very high just based on the location of where price is fluctuating at the moment. Know you risk, and choose the scenario that is better suited for your personality and goals. Be in a hurry to gain perspective, NOT profit. There is always opportunity somewhere and it is having a good perspective that allows you to anticipate it and capitalize on it, not chase it.

Questions and comments welcome.
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Comments

are buyers entering or are you wishing they are?
+4 Reply
@DrJLT,
lol
Reply
My thinking: we could hover here for a bit, breakdown with vicious volume over the coming weeks clear out all the weak hands and make out way up.


+3 Reply
BRRD Tyebit
@Tyebit, more or less this, yes
Reply
@Tyebit, this makes the most sense...
Reply
I appreciate your level headed analysis. It really helps keep perspective in this bear market. Thanks.
+3 Reply
Comment on this please
+2 Reply
@Bombita, sure I'll comment... stop spamming your chart everywhere.
+10 Reply
Bombita whoisthelorax
@whoisthelorax, lol I have the right to do so
Reply
So are you still stuck in the 2107 mindset that HODLing is cool? When will that view change do you think?
Trade signals Sunday - For more experienced traders only
+2 Reply
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