Bitcoin: One More Try 50K?
Bitcoin attempted to break out coming into the New Year holiday establishing a higher high at 45922 followed by a SWIFT rejection back into the range. While a new high was technically made, the failure to follow through means Bitcoin is still arguably consolidating between 40K support and 45K resistance (Wave 4 extension?). In this brief article I am going to outline how I will use this information to prepare for the coming week.
First, the trend structure must still be acknowledged. The higher low at 40K is STILL intact (Wave 4 has NOT overlapped Wave 1). AS LONG AS THIS criteria exists, I will continue to expect a greater chance of follow through for LONG signals and setups. This means shorts are counter trend, HIGHER RISK and lower probability and should be assigned LOWER EXPECTATIONS.
Second, Wave 4's can extend (compound corrective structures), perhaps that is the best way to articulate what is going on here. This means a bullish Wave 5 into the high 46 to 50K area is still within reason. A surprise catalyst can spark such a move.
Third, I am going to assign probability expectations to zones within the 40 to 46K range. The zone between 40 to 42K is the HIGH probability BULLISH reversal zone. This is where I am MOST interested in new long setups. 42 to 44K is the RANDOM zone which means ANYTHING can happen here. 44 to 46K is the HIGH probability BEARISH reversal zone. Which makes it attractive for exiting long or taking VERY aggressive shorts (which I don't participate in).
Keep in mind, the bullish scenario can completely change upon unexpected news etc. The fact that price failed to break out signifies that there are many MORE longs stuck in this market hoping for a continuation. These longs can greatly add to the selling pressure upon any bearish surprise. Just something to think about.
The key skill in this game (if there is one) is the ability to extract actionable value from what appears to be common information WHILE simultaneously using it to ADJUST expectations. That is the passive mindset required to anticipate markets. The opposite side (logic) is what leads to reacting to markets.
Thank you for considering my analysis and perspective.
First, the trend structure must still be acknowledged. The higher low at 40K is STILL intact (Wave 4 has NOT overlapped Wave 1). AS LONG AS THIS criteria exists, I will continue to expect a greater chance of follow through for LONG signals and setups. This means shorts are counter trend, HIGHER RISK and lower probability and should be assigned LOWER EXPECTATIONS.
Second, Wave 4's can extend (compound corrective structures), perhaps that is the best way to articulate what is going on here. This means a bullish Wave 5 into the high 46 to 50K area is still within reason. A surprise catalyst can spark such a move.
Third, I am going to assign probability expectations to zones within the 40 to 46K range. The zone between 40 to 42K is the HIGH probability BULLISH reversal zone. This is where I am MOST interested in new long setups. 42 to 44K is the RANDOM zone which means ANYTHING can happen here. 44 to 46K is the HIGH probability BEARISH reversal zone. Which makes it attractive for exiting long or taking VERY aggressive shorts (which I don't participate in).
Keep in mind, the bullish scenario can completely change upon unexpected news etc. The fact that price failed to break out signifies that there are many MORE longs stuck in this market hoping for a continuation. These longs can greatly add to the selling pressure upon any bearish surprise. Just something to think about.
The key skill in this game (if there is one) is the ability to extract actionable value from what appears to be common information WHILE simultaneously using it to ADJUST expectations. That is the passive mindset required to anticipate markets. The opposite side (logic) is what leads to reacting to markets.
Thank you for considering my analysis and perspective.
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