Bitcoin has rejected the 68 to 70K resistance area as I anticipated in my previous article. If you read it, you will recall that I explained the level of risk for longs at such a location was high for this time frame. What there was NO way to know was IF it were to sell off, how low would it go? Only the market can answer and that is what we can see NOW. Two major support areas were compromised and the range low near 56K was tested in just a matter of days. The key to NOT getting caught in this buying too early is WAITING for price confirmation around specified levels.
IF you are stuck in a long because you bought too early, there are two things you need to accept: markets are MOSTLY random and NO ONE can tell you the future. In this situation, when Bitcoin was flirting with 70K, many "experts" claim it will continue higher, you will miss the break out, etc. And you will notice the same phenomenon now: "experts" will project this move visually, forecasting moves to 50K or lower, etc. If you want to be able to navigate this environment more effectively, STOP consuming low grade information and learn to gather much better information from the market itself. I'm not right all the time, but I can at least assess risk in a consistent way and make better informed decisions simply because I listen to the market ONLY.
The current price area offers a better opportunity for LONGS at this time, even though a test of the 56 to 53K support area can occur over the following week (see illustration). The arrow on this chart points to the recent pattern of buying activity and this is a good example of what you want to see again which can be a form of confirmation. Looking for shorts in this situation is best for day traders only because of the squeeze potential. This is where a confirmation tool like the Trade Scanner Pro shines. Without any way to confirm levels, you have no way to gauge the probability of a level breaking or not. Just ask the traders who stepped in front of the 66 to 64K support, and the 60K support.
What time frame to look for confirmation on will depend on what type of trade you are looking to take. On this time frame, which is more appropriate for swing trades and investing, a confirmation pattern can take a number of days. You need to know exactly what to look for and understand how to best manage risk by utilizing a position sizing strategy.
As you can see on this chart, 56K was quickly rejected, but the candle is still open and the recent momentum is still intact (bearish candles). When I see this, I prefer to wait for more complex reversal patterns like double bottoms or failed lows compared to something like a single pin bar.
It is important to ALWAYS consider the market from both sides and then use that information to filter your trade ideas. The general location is attractive for longs, especially on the investing time frame but that does not mean it will reverse back to the highs here. IF the 56 to 53K support breaks, a test of 50K becomes likely. IF that breaks, then the 40Ks can be in play. AGAIN it is ALL about CONFIRMATION. No confirmation, then there is a much lower chance of a significant reversal.
Overall, no matter what you read or hear, the fact is the broader Bitcoin trend has not changed, it is still BULLISH. The mid term trend is range bound and price is now flirting with the range LOW. IF if holds over the next week or so this can be a buying opportunity. IF it breaks, the state of the broader trend may be in question and will call for reevaluation. This is NOT a game of being right, it is a game of managing risk in a highly random environment.
Thank you for considering my analysis and perspective.