Bitcoin: Price Favors Bears.

14 באוג׳ 2022

Bitcoin continues to linger and generate sell signals that fail to follow through. Is this a sign of renewed strength? Is this the beginning of the next big rally? Are you still fooled by such talk? The 22 to 24K resistance area has not been cleared, and the broader bearish context has NOT changed. This means price at current levels highly vulnerable to bearish catalysts and RISK is most unattractive for longs.

Based on the current price action, you can draw converging trend lines on this time frame. These type of rare price patterns often hint toward a significant reversal (in this case BEARISH). Along with that, IF the current candle closes as a bearish pin bar, and the next candle takes out its low, another sell signal will be in play. I have been pointing out sell signals for weeks now, why won't price sell off? When markets are complacent, they tend to be very irrational, and can linger or lack any type of momentum until normalcy in terms of volume returns. Also just because sell signals appear, does not mean they "have" to follow through. Markets are highly random in case you forgot.

In order to be best prepared for this environment, you NEED to pay attention to what is NOT obvious. The 25K AREA is a resistance which means selling activity is likely to appear. The context of the general environment (something you will NOT see on a chart) is NOT supportive of any sustainable rallies. The bond market has reversed lower (rates slowly rising again), the FED is still in rate rising mode, and we are about to enter the SLOWEST time of the year in terms of seasonal volume. For those who enjoy consuming "logic", the recent bullish sentiment is likely a result of too many shorts getting squeezed or getting forced out of their positions.

If you pay attention to the bigger technical picture on Bitcoin (stop listening to talk), the current movement from 17K to 25K has a high chance of becoming a lower high within a broad bearish structure. Whether price establishes the lower low (break 17K?) or not is not something that can be forecast. You have to assign a probability to the event and based on current context and structure, that scenario is still a reasonable possibility.

In these situations, all it takes is an unexpected catalyst. A chart will NOT help you with this. The most effective way to navigate this situation is by accounting for the RISK. For example: If 25K is cleared, 28K is the next resistance, but if a new sell signal follows through, 20K or even 17K can be tested relatively quickly. The RISK is greater than the potential for longs at these prices or on the flip side, RISK favors the shorts.

Thank you for considering my analysis and perspective. I hope you find it helpful.