BTCUSD: Setting Up To Revisit Lows? Or Just Noise?

BTCUSD update: Bullish momentum is still carrying price higher, but it is slow. In this report I will cover how to manage expectation in this type of environment and what to look for as far as signs of weakness.

When price action hesitates like it is doing at the moment, it can scare traders out of a good position too early, especially for those who have a hard time dealing with losses. The main thing to focus on in a situation like this is the direction of the immediate momentum which is bullish. This is easily defined by the trend line that is still intact. As long as this condition stays true, and price does not close below 10300, it is more likely to grind higher.

The trend line boundary at the 10300 area is a good place to look for reversal candles on smaller time frames, and IF price closes below, it does not mean the trend shifts to bearish. The 9986 to 9723 minor support is still an area to look for reversals also. Price retesting this support just means subwave 2 of Wave v is still in play as long as there is no overlap with Wave i.

A tricky scenario to be mindful of is IF price retests the 8800 area which is the lower boundary of a minor reversal zone just below the 9280 low. A push into this area can appear very bearish and attract over reactive shorts, along with a lot of drama. The key to avoiding getting caught at a low is watching for the establishment of reversal formations, especially if they are pin bars on this time frame. Range bound markets will often test lows and produce false breakouts, especially when they are counter to the broader trend which is still bullish in my opinion.

What will confirm that price momentum is bearish again? Reversal patterns at the current price level are not enough. A break and close below the current bullish trend line along with breaks of the minor support and reversal zone are required. That means price would have to decline by more than 1500 points to finally consider momentum bearish? For my outlook on this time frame, yes. Remember depending on the time horizon you are focusing on, your criteria for defining momentum would be different. If I were day trading this market (which I have no intention of doing) I would be bearish as soon as the current candle closed and price breaks the low of it. That is a much different perspective which carries tight stops and profit targets to give you an idea.

In summary, having a specific plan and predefined criteria to measure against are essential to not getting confused by the hesitant price action we are facing at the moment. Knowing what to look for within your specific time frame is what minimizes those emotional impulses to react to noise. Whether this market chooses to extend the consolidation or fake out and go higher, I am prepared either way and keeping an eye for any attractive opportunities upon any retest of the supports mentioned earlier. I have been bullish the whole way and will continue to manage my position from that outlook as long as the general fundamentals stay intact.

Questions and comments welcome.