Bitcoin: Start Of Wave 2?
Bitcoin resistance is asserting itself around the 25K level as ANTICIPATED. IF the current candle produces a bearish pin around the 25K location, and compromises the pin bar low (24,200 AREA), this will confirm a sell signal for an aggressive swing trade short. Is it wise to short a generally strong market? Here are some points to consider.
1. The recent move from the 21K area to the 25K resistance completes a broader 5 Wave sequence originating from the December low. The completion of 5 waves typically signifies that a correction is much more likely to unfold next. This can take place over the next week or so. This is often the time when the MOST outrageously bullish forecasts start appearing, particularly from very high profile "professional" investors. I still wonder why don't they come out with these forecasts at the market lows?
2. IF a bearish retrace unfolds from here, it may be a Wave 2 (since 5 waves complete Wave 1). Wave 2's can potentially retrace as much as 100% of Wave 1 (December lows). While this level (16Ks) is a potential profit area for shorts, at this point it would not be a good idea to form such an expectation. There is NO WAY to know how far the market will go with any accuracy so it is more effective to anticipate the next inflection area which is between 20 and 22K.
3. It is possible for Wave 5's to extend. While a correction is likely to follow, there is NO guarantee that it will, or that it will test obvious levels. Keep in mind, the 28K AREA is the next resistance. A catalyst can appear out of no where. This is a RISK that you MUST keep in mind if you are going for the short. Reasonable swing trade stops are still around 1500 to 2K points.
While many are convinced this is the new bull market, I am not so quick to jump on that herd mentality band wagon. The interest rate situation has not particularly improved in terms of a bullish argument for the broader markets. The other great uncertainty revolves around the coming regulatory changes which NO ONE seems to be worried about at the moment. This may not be apparent for a few more months, and it presents some potential surprises. While a positive outcome is possible, there is NO WAY to know how these markets will adjust. I do not think this is an opportune time for investors, ESPECIALLY at a swing high resistance.
The best way to get through this is to keep expectations SMALL on both sides until we have some broader market alignment (like bonds, etc). It is a slow process, and playing defense in these situations will help you avoid getting caught on the wrong side. Swing trade, day trade or invest small if you must as these levels.
Thank you for considering my analysis and perspective. I hope you find it helpful.
1. The recent move from the 21K area to the 25K resistance completes a broader 5 Wave sequence originating from the December low. The completion of 5 waves typically signifies that a correction is much more likely to unfold next. This can take place over the next week or so. This is often the time when the MOST outrageously bullish forecasts start appearing, particularly from very high profile "professional" investors. I still wonder why don't they come out with these forecasts at the market lows?
2. IF a bearish retrace unfolds from here, it may be a Wave 2 (since 5 waves complete Wave 1). Wave 2's can potentially retrace as much as 100% of Wave 1 (December lows). While this level (16Ks) is a potential profit area for shorts, at this point it would not be a good idea to form such an expectation. There is NO WAY to know how far the market will go with any accuracy so it is more effective to anticipate the next inflection area which is between 20 and 22K.
3. It is possible for Wave 5's to extend. While a correction is likely to follow, there is NO guarantee that it will, or that it will test obvious levels. Keep in mind, the 28K AREA is the next resistance. A catalyst can appear out of no where. This is a RISK that you MUST keep in mind if you are going for the short. Reasonable swing trade stops are still around 1500 to 2K points.
While many are convinced this is the new bull market, I am not so quick to jump on that herd mentality band wagon. The interest rate situation has not particularly improved in terms of a bullish argument for the broader markets. The other great uncertainty revolves around the coming regulatory changes which NO ONE seems to be worried about at the moment. This may not be apparent for a few more months, and it presents some potential surprises. While a positive outcome is possible, there is NO WAY to know how these markets will adjust. I do not think this is an opportune time for investors, ESPECIALLY at a swing high resistance.
The best way to get through this is to keep expectations SMALL on both sides until we have some broader market alignment (like bonds, etc). It is a slow process, and playing defense in these situations will help you avoid getting caught on the wrong side. Swing trade, day trade or invest small if you must as these levels.
Thank you for considering my analysis and perspective. I hope you find it helpful.
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