Bitcoin Triangle: Bulls In Control?

Sell signal off the 58,500 area but no follow through means it is too early to react (or over react) when it comes to judging the short term direction of Bitcoin. Shorter time frame oscillators may be bearish, but they FAIL to account for the price structure that is still intact on the bigger picture.

Since the 48,500 buy signal that we shared (and I shared here a few articles ago), a bullish trend line (see dotted line on chart) has been established and continues to hold above the 56K area. In order to confirm bearish momentum, price needs to close decisively below which means a push to 55K or lower and then closes there.

If another bullish pin bar develops off of the 56K area, it will be asserting that Bitcoin is consolidating within a small symmetrical triangle which can be interpreted as a trend continuation pattern. The broader trend is clearly bullish.

I realize everyone wants "news" or some kind of "story" to appeal to the need to maintain some kind of "logic" or feeling of control. This is why most traders and investors (especially short term) do not succeed in the long run. Markets are highly random and thinking in absolutes or conventional logic is a liability in this game.

We can't see the forces or the actual order flow that drives price, but price itself in the form of patterns can provide clues as to where the order flow is likely to take price next. From this we can obtain anecdotal probabilities and gain a sense of confidence based on what the MARKET is saying, NOT people, especially newly minted "authorities".

A breakout from the current consolidation can lead price to the mid 60K (see inflection point on chart) over the coming week. That is what the broader structure favors.

What IF price fakes out again? Another fake out will imply that there are too many longs and a broader correction is likely to follow. Such a scenario can see price test the 50K support or even the mid 40Ks.

Recent evaluation of the broader price structure since the 57K initial peak is still open to the possibility that Bitcoin could be entering the early part of a broad Wave 4 consolidation. There have been no confirmations, but it is a scenario that we can't forget about just yet. A great example of a broad Wave 4 is the XAUUSD chart from the August peak.

In these situations, where the market is conflicted, often it is best to do nothing until price confirms one scenario or the other. Yes it requires a lot of patience, especially for those who "need" action. If you are in a swing trade or in a longer term investment, it is not a bad idea to reduce risk at these levels until price chooses what it wants to do. The thing to keep in mind is, the high 50K area or low 60K area is not a broad support, it is a resistance.

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