Bitcoin Nears The Downtrend + Holiday Shenanigans
Updated
Just a quick Bitcoin update. Big daddy is still in the broadening structure I've been watching for weeks. This still means more volatility seems fairly likely to me, even during the holiday period where many might not be paying attention to what's going on - hence the shenanigans.The UO (Ultimate Oscillator - red) finally looks like it's breaking the downtrend since October. Additionally, as price moves up today, funding on Binance is going into negative territory. This means people are likely adding to their shorts at these levels. Many traders are also out of the market, waiting to jump back in at signs of recovery. I've seen $49500 thrown around as a "buy back in" level for some folks.
What does this mean? It means we could be in for a pretty large move if this downtrend (orange) breaks soon, fueled by short liquidations and traders piling back in, not wanting to miss out. I think it can take price towards 58k in a short squeeze, rather than simply pausing at the obvious 53k level. We already know about the China ban, and Chinese holders selling. We already know that inflation is getting worse in the U.S, and interest rates will probably be raised soon. But what we don't know is how crypto fits into all this. People will now place their bets on speculation. The market prices in information it already knows, and moves up based on future hopes and expectations. We also know that Bitcoin has now so far failed to produce the end of year rally many were expecting. This has already happened. People are disappointed. Is there any more disappointment to be had?
On the bearish side, I would NOT like to see a failed breakout. It should ideally be pretty clean, and I do not want to see price falling back below the downtrend, because that would be an extreme sign of weakness. In that case, I will reassess. Bitcoin could drop to the low 30k's quite quickly.
Let's see what happens! It's nearing the end of the year. Many are not expecting fireworks here.
This is not meant as financial advice - it is meant for speculation and entertainment only.
-Victor Cobra
What does this mean? It means we could be in for a pretty large move if this downtrend (orange) breaks soon, fueled by short liquidations and traders piling back in, not wanting to miss out. I think it can take price towards 58k in a short squeeze, rather than simply pausing at the obvious 53k level. We already know about the China ban, and Chinese holders selling. We already know that inflation is getting worse in the U.S, and interest rates will probably be raised soon. But what we don't know is how crypto fits into all this. People will now place their bets on speculation. The market prices in information it already knows, and moves up based on future hopes and expectations. We also know that Bitcoin has now so far failed to produce the end of year rally many were expecting. This has already happened. People are disappointed. Is there any more disappointment to be had?
On the bearish side, I would NOT like to see a failed breakout. It should ideally be pretty clean, and I do not want to see price falling back below the downtrend, because that would be an extreme sign of weakness. In that case, I will reassess. Bitcoin could drop to the low 30k's quite quickly.
Let's see what happens! It's nearing the end of the year. Many are not expecting fireworks here.
This is not meant as financial advice - it is meant for speculation and entertainment only.
-Victor Cobra
Note
Testing the downtrend right now - 4H chart: Note
Note
Well, it looks like the short squeeze was short lived. Bitcoin is now testing the broken downtrend as support. If it closes today below, that would be a pretty bad sign I think. It would mean we can drop all the way to the low 40k zone, or perhaps lower. Definitely want to see this level bought for any upside to close out the year. Note
Zoomed out: Note
Well, depending on how you draw the trendline, we are not actually back below it. There's an argument to be made here that this is still a retest. Here is how I have it drawn now - someone in the comments did question the trendline. It's true trendlines can always be redrawn to fit a bias. Note
And this is how I drew it before. Note
During periods of uncertainty and pessimism like these, I like to use the less bullish trendline for confirmation. Here it is zoomed in the way I originally drew it. I think if it can break out here that would be fairly promising - perhaps testing much lower levels will not be necessary. Note
Looks like Bitcoin has moved sideways out of the downtrend, regardless of how you draw it. This leaves room for a test of liquidity in the $44-45k zone, however. Note
And this is roughly how I had it drawn before: Note
The other way of drawing it has more clear touches, so perhaps it's more "valid"Note
So Bitcoin is testing liquidity in the 44k area, and retesting the downtrend once more. This isn't particularly strong price action. Fair to say that if Bitcoin can bounce pretty hard from here that would be a good sign in the short term. But breaking back below the more "optimistic" downtrend could send Bitcoin back to the 30k range. Note
There's a lot of fear in the market at the moment - and it's substantiated fear too. The fundamentals for further price appreciation in US markets are dwindling, so much of the selloff likely has to do with US investors and lack of demand. China now cannot play as big of a role as before, which impacts demand as well. I'll be coming out with a more comprehensive update soon.
Note
Yikes. Note
I think if Bitcoin can't bounce back above the downtrend here soon, it can head towards the mid-30k zone for a pretty large liquidation event. 
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