Bitcoin went on a massive rally this weekend. Not only did we break out of the W bottom neckline at 36.2K, where I called for a long in yesterday's post (you can check it out in the linked ideas section), price also broke the resistance trendline of the the multi-week symmetrical triangle at 37.5K. Even more is the fact that Bitcoin rallied all the way up to 39.8K, putting in a higher high on the higher timeframes for the first time since the crash down to 30K. This is very significant, as Bitcoin has now formed a pattern of higher lows and higher highs, which is the definition of a bull market. In other words, the trend has changed from to .
The change in market structure is undeniably , but we should still exercise caution, for three main reasons: 1. This breakout occurred on a weekend instead of on a weekday, which would have been a higher conviction move, 2. Bitcoin has had a habit of fakeouts and false breakouts in the past few weeks, falsely breaking up and down multiple times to trap and liquidate both bears and bull, 3. Bitcoin is now at a critical as it is testing the 200MAs on the 4H timeframe. If we get rejected here, it might trigger further continuation to the downside. As it is the first time that price is testing the 200MAs on the 4H TF since the breakdown, there is a high likelihood that price will struggle to break through unless there is some major catalyst. The big question now is will we get rejected here and continue the bear trend or break above and start the journey to 65K and new ATH . Either way, expect turbulence and .
Trade Setup 1: I will be looking to add to my long if we can close above the 200MAs on the 4H TF, especially if we break above and come back to retest it as support.
Trade Setup 2: I will be looking to close my long and maybe even open up a small short if price gets rejected here at the 200MAs on the 4H TF.
Trade Setup 3: I will be looking to add to my long if we retest the 200MAs on the 1H TF at 37K and successfully bounce off of it as support, as shown below.
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