MarcPMarkets

Bitcoin: Elevated Risk For Longs.

BITSTAMP:BTCUSD   Bitcoin
Bitcoin is now pushing into the 50K AREA resistance zone while presenting a potential momentum continuation pattern (inside bar). A break of the inside bar high can lead to a test of 50K and possibly higher. The zone between 50 and 51K (blue rectangle on chart) is a high probability bearish reversal zone which means unattractive place for new longs, especially for larger time frame investors.

Strategies that make the most sense in terms of risk right now are day and swing trades with low expectations on the long side. Stop placing so much weight on what you can SEE, think more about what you CAN'T SEE which is the potential RISK. The further price stretches into the reversal zone, the greater the risk of reversal.

The blue line illustration on the chart is the scenario that I anticipate over the coming week or two. Again it is important to understand that markets are highly random and that there is NO way to know the future. The market can present us numerous scenarios and we want to be prepared for a narrow range of scenarios that are more likely to appear. The key to acting on this is CONFIRMATION from the price action.

Right now, all we have is an inside bar developing that is often a momentum continuation pattern. If the high is taken out, that is a signal to go long, BUT if the low is taken out, that could be the beginning of a broader retrace back to the 44, 45K area.

Also I wanted to mention that B waves (which this still might be), can produce a higher high while confusing many into thinking the market is breaking out. WATCH carefully for the fake out in this situation. It often looks like a bearish pin bar (judge only on the close).

My goal here is NOT to scare people out of participating, it is to make you AWARE of the risk. It is usually at these points where people can no longer handle the fear of missing out and buy the top. While there is never a "bad" time to invest, you can control the risk you take by knowing how to effectively categorize price points. I will cover this topic more during my Monday stream.

Thank you for considering my analysis and perspective.

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