BitcoinUpdated Bitcoin Looking for Pullback Soon and Another Wave Higher
As you know from previous posts, I went long at $6500 after accumulation and took some partial profits. I'm taking full profits right here. I have a small short opened at $8900.
I'm looking for a pullback from $7900-$8300 area. My stop is at $9250. Breaking that resistance I would re-evaluate but likely just look for another point to short at a higher price. There's a lot of resistance in this area, so probability says we pullback here, but I'm getting out of the way if $9250 breaks.
When you get a reversal like this from $6500, you look for 2 things. First you look for a 3-5 day run that turns down. That would have been similar to March 17th to 20th. That didn't happen. Which tells me this bull move is going to take some time to complete, which makes more sense as we had too much bearish sentiment at $6500.
Also, we got a clue looking at altcoins that they were WAY oversold and due for a big move. Altcoins went up massively the last week and now short term overbought. I do not think they are done. Smart money didn't buy up cheap altcoins to move them up for a week then stop. They pull back a bit then they go much higher. Too many of them have resistance levels above these prices.
My guess at what happens next.
As I suggested in previous ideas, too many people were talking about going short at $8500 and got stepped on. I think the same thing is going to happen on higher prices. So how does smart money kill everyone? Take price above the log scale trendline. Take price over the .618 retrace. Take price over 10k psychological barrier. Get everyone to proclaim the new bull market is here and then take prices lower. That should set up the final dagger where they can get retail traders to full capitulate. Bitcoin will trade in a tight range below 6k until its ready to breakout for the next bull market, which I think will begin in July or August.
But... I still look for signs that I'm wrong. A really strong bull run that lasts 12 or more days after the pullback and took us over $11700 would get me bullish. Thats the real prove it area for me.
I'm looking for a pullback from $7900-$8300 area. My stop is at $9250. Breaking that resistance I would re-evaluate but likely just look for another point to short at a higher price. There's a lot of resistance in this area, so probability says we pullback here, but I'm getting out of the way if $9250 breaks.
When you get a reversal like this from $6500, you look for 2 things. First you look for a 3-5 day run that turns down. That would have been similar to March 17th to 20th. That didn't happen. Which tells me this bull move is going to take some time to complete, which makes more sense as we had too much bearish sentiment at $6500.
Also, we got a clue looking at altcoins that they were WAY oversold and due for a big move. Altcoins went up massively the last week and now short term overbought. I do not think they are done. Smart money didn't buy up cheap altcoins to move them up for a week then stop. They pull back a bit then they go much higher. Too many of them have resistance levels above these prices.
My guess at what happens next.
As I suggested in previous ideas, too many people were talking about going short at $8500 and got stepped on. I think the same thing is going to happen on higher prices. So how does smart money kill everyone? Take price above the log scale trendline. Take price over the .618 retrace. Take price over 10k psychological barrier. Get everyone to proclaim the new bull market is here and then take prices lower. That should set up the final dagger where they can get retail traders to full capitulate. Bitcoin will trade in a tight range below 6k until its ready to breakout for the next bull market, which I think will begin in July or August.
But... I still look for signs that I'm wrong. A really strong bull run that lasts 12 or more days after the pullback and took us over $11700 would get me bullish. Thats the real prove it area for me.
Note
Price action so far has not confirmed that we are falling. This ascending triangle is a bullish pattern. I took half my short off the table and will cover at $9000. Might even scalp a long, but its generally too high to go long.
So this is how price action can tell you to be careful. If this support breaks down then we should get our pullback. If it breaks higher then I'll look for another short entry. Tons of people are short here and resistance may hold but the longer we stay close to $9000 the more buyers are eating away the sellers then it can pop up.
Most alts don't look ready to go up so this might be a case where you just see bitcoin go up and alts do nothing.
Note
It got rejected earlier this morning but totally recovered that rejection candle. This is now 6 touches of this resistance. Each time, its eating away at sell orders that are sitting there. So probability increases that we see an upside breakthrough each time it visits this area.
So even though I was expecting a pullback, this type of price action says we likely go higher. Traders have to be able to react and when price doesn't do what you expect, its best to get out of the way. This doesn't mean a break up is guaranteed. It just means the probability increases it breaks up so I don't like the set up and I'm not going to sit in a short and get run over. I'll remain flat and may scalp a move up but its not a great area to go long either.
Note
Bulls haven't been able to get a break up and seeing some alts roll over. High volume candles at the 9k mark. So I'm starting to see signs that this is distribution so starting another short again. I will cover at $9050 if it wants to break up and look to build another short at $9400 if we get thereNote
I think if that big red line breaks we'll see heavy selling, which is why I started the short. If it holds, then we could easily get a break up out of the triangle. I just don't believe it will have much room upwards though a short squeeze could always happen. thats why I have a tight stop.
Note
In my post Bitcoin Long in play, I originally suggested we could get a sharp move to 9.5k-11k without pullbacks. that was the red scarnio. And that is exactly what it looks like we are getting. Typical short squeeze just like 2014 but look at the red overlay. Unfortunately that didn't end well, so we need a pullback and longer consolidation in order to go much higher.
Yesterday bitcoin broke below that red line aggressively and I moved my short stop to break even and got stopped out.
At this point we essentially have a run from $6500 to $9400 with no pullback. This is actually a fairly bearish development as bull markets need pullbacks and there isn't much support underneath.
So now I will work on scaling into a short position and I will stop out at around $10100 though I'll actually look for a 4 hour close above that level before I close with an emergency stop at $10300. If we got to 10k, I will end up with about a $9700 average and $600 hard stop. I expect at least a $1200 on a pullback where I'll cover partial, but I will actually be looking to build a long term short position to hold for several months.
I also realize I will have to watch price action and probably get stopped out a few times but I believe we are in a bear market and will be for a few more months, so as I trader, I look to short bear markets as a primary position. If bitcoin can keep marching up I'll eventually turn bullish but not yet.
Note
Nice to wake up to my short in nice profit. I took partial profit to secure gains and moves my stop to break even. Now I'll look for an area to cover.
Ideally we got the 50% line around $7800 to $8000 but I'm not sure it gets there. I think $8400 being the .328 so I'll take profits there. I expect a bounce around $8950 as that was strong horizontal resistance that is not support. So I could envision it taking a day or so to work its way below that. And there is a possibility that this area holds. If it does, then I will ultimately get stopped out and I won't play much of the bitcoin move up and just look to reshort. Too much risk to take a long at that point at $8950 unless its just a scalp for a bounce.
I still think alts have room to run, so I'm slowly going to buy back into some names I like and just be patent with them.
Note
We got the bounce exactly at $8250 but price action is stronger than I expected so I covered my short with nice profit. I also notice many alts are moving. I bought some btc non leveraged and also bought a few alts.Bitcoin has a tendency to trap both bulls and bears. It often goes up or down without pullbacks and so I'm starting to sense that it will not fall below $8800. I can't really open a heavy leverage long here as the risk to $8400 is a bit too much but I have a small scalp and will see how it plays out.
Note
I still think this market needs to go to 8k-$8400 to be healthy. However, If Bulls work on this $9300 area all day, they may chisel away resistance and take it higher.
My overall scenario from the bottom was a move up without pullbacks that had a chance to go up over 10k and get everyone bullish. So I would not be surprised if bitcoin heads up here and passes that .618 mark to get people loading up.
However, i believe its another trap. We are going to slowly roll over and form a round top here and then start heading down for the final ascent which will be a slow grind below 6k where bitcoin will find its bear market lows later this summer.
Note
Still going sideways. Not much to update. its consolidated long enough that it could make a move higher any time. It's also still very much in need a more meaningful correction, so there really isn't a good trade. I've been mostly short bitcoin, long different alts now for a week. Still have a very small short I've been in for a long time now. $9400 and I'll reverse and go long. May add to short on a break of consolidation lows.Note
As I suspected this morning, we consolidated long enough to get a move higher. I covered my short and went long at $9400. I've covered part of that for now and will look ato add if we go down.
Go back to the top of this idea and I think bitcoin is perfectly on track to hit $10500. And this was something I mentioned at $6500 when everyone was bragging about shorting at $8000.
But breaking 10k is going to get everyone bullish. Maybe the market will continue up but I'm expecting it will turn south here soon so I will post another idea when I believe its time to short.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.