After trying to reverse twice off of the 57K support, Bitcoin has broken the level and is now poised to test the 48 to 50K support. While current prices offer an attractive location for a swing trade long, there is no signal to take such a position. So how can Bitcoin prove that a new long is within reason?
Understanding market context is key to making an effective decision. After a series of lower highs and lower lows resulting in the 57K support break, it can be argued that the current price structure and momentum is bearish (this will be obvious on small time frames). What novice traders get confused by (because oscillators don't account for broader context) is the fact that price is probing support areas. Small time frames will call for being bearish, while the probability of the location (something you can't see) calls for being bullish.
The bearish structure is correcting a broader BULLISH trend. This means when price reaches a notable support level (like the 50K area), bullish activity should be anticipated, but what kind of bullish activity? Since the recent structure is bearish, MORE confirmation should be considered before being able to justify taking any risk. In this situation, a single candle reversal pattern like pin bar is NOT enough and would be considered highly aggressive.
Waiting for price structure to prove stability comes in the form of recognizing a double bottom, or higher low formation AFTER price has tested the anticipated support. WAITING is not popular with the typical trader or investor because everyone believes they are going to "miss the next move". So far anyone that got lured into all the "forecasts" of BTC reaching 85 or 95K over the next month got in TOO EARLY. If you haven't figured it out yet, HIGH quality opportunities are rare and not advertised on public platforms.
The other mistake to avoid is reacting to what you see, especially if its going against the broader context. IF Bitcoin clears 53,500 that would generate a new sell signal on this chart. While it may make sense for smaller time frame strategies, the risk of reversal is very high as price fluctuates into the low 50K area.
When markets correct, it can be very confusing, especially if you do not follow a specific set of rules and have a clearly defined strategy. Technical analysis offers ways to measure risk, evaluate probabilities and formulate a set of rules around particular market behaviors. "Making money" is not a strategy, it is a potential outcome that comes along with an associated risk. My rules help me to identify higher probability opportunities in an objective way which helps to minimizes my own thoughts and opinions. I listen to price and right now it says wait for support around the low 50Ks.
Thank you for considering my analysis and perspective, I hope you find it helpful.
Funny how I draw the support levels on my chart based on your posts... and here we are just a few hours later -- price tested the 53K support (noted from your previous post) bounced off it like it should and we're already flirting with 57k resistance in a matter of an hour --
Marc might not write what you want to read (HYPE) but the guy is certified. Tells it like it is. Gotta respect it.
Thanks Marc
simplejoe1
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always good to hear what Marc has to say in this crazy roller coaster
Free_Loader
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Quality analysis as usual. I’ve been following Marc for maybe 2-3 months, and he’s been so spot on each single time it’s remarkable. Oftentimes now I ask myself before making a move on the market, “what would Marc do.” Like he says, this IS a very unpredictable market and people are pent up to make profits quickly (they have deadlines or purchases they want to make or have been holding back on), but as we saw on Black Friday, news of another “variant” was blamed for the cause of markets tanking. We know it really wasn’t but it was convenient for those pulling the strings of the market to take advantage of the news. Now that WHO and South African Medical Association came out saying it’s nothing serious and mild at best, will markets rebound on Cyber Monday? It’s all a game, and the patient tend to win the most, whether you’re waiting to get in at a better price point or are a HODLER.
AlphaBravoCharlie77
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@Free_Loader, Hi. I work in healthcare R&D for my day job. Just wanted to point out that WHO's position is similar in character to Marc's; that is, there are reasons to believe that Omicron is really bad, but more data is required (who.int/news/item/28-11-2021-update-on-omicron). I completely agree with the rest of your comment though. Marc is excellent and this is a very volatile market (and volatility clusters).
sobh4
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it touches 42 any suggestions?
simplejoe1
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in light of the breakout, has this analysis changed?
MicroStrategy Average price of $29,534 per bitcoin Big companies with big capital will not let bitcoin fall like 2018
simplejoe1
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@sample4u, what can they do? bitcoin has billions in volume every day
HeyJonBray
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Fantastic points. I'm constantly having to explain why oscillators give false readings around support (seems to be a lack of understanding of volume profiles in general), I like your response: they don't provide broader context. Much more concise.
Pretty much what I'm looking at when you remove emotions from the mix. Keep up the great charting.
Marc might not write what you want to read (HYPE) but the guy is certified. Tells it like it is. Gotta respect it.
Thanks Marc