$BTC - Significant Signs of Weakness
Updated
Elon Musk has been on a tirade against Bitcoin on his twitter - but the signs of weakness were on the chart well before he started tweeting negatively about it. Let's take a look at what happened, and what to look for next.
First lets break down the price action concepts on this chart.
Weekly Swing Failure - this was a swing high on the weekly chart that price spent some time above - but was sold down after the
COIN IPO. Ultimately, the weekly candle that wicked above the swing high closed below - hence, Swing Failure.
Daily break in Market Structure - I've drawn a line from the previous daily swing lows which were the origin of a large (40% and 27%) up-move. A daily close below these levels signifies a bearish break in Market Structure.
The "Tesla Buys Bitcoin" candle - the significance of this region of price is that there is
Assuming we can't bounce off of this volume gap, I'm looking for a reaction at the
42K weekly swing low, the 38k top of the weekly order block, and the 
36K bottom of the weekly order block.
If we close below the "
Tesla candle" on a high timeframe, I do believe we may be in a short-term bear market. If this happens, expect altcoins to take a dive as well.
Will, OptionsSwing Analyst
First lets break down the price action concepts on this chart.
Weekly Swing Failure - this was a swing high on the weekly chart that price spent some time above - but was sold down after the
COIN IPO. Ultimately, the weekly candle that wicked above the swing high closed below - hence, Swing Failure.Daily break in Market Structure - I've drawn a line from the previous daily swing lows which were the origin of a large (40% and 27%) up-move. A daily close below these levels signifies a bearish break in Market Structure.
The "Tesla Buys Bitcoin" candle - the significance of this region of price is that there is
- A volume inefficiency (Price has only traded upwards through it, never down into it)
- People who bought Bitcoin based on the news are still in profit. A drop below this region can easily cascade into more selling as these news-buyers begin to close their positions to avoid further losses.
Assuming we can't bounce off of this volume gap, I'm looking for a reaction at the
42K weekly swing low, the 38k top of the weekly order block, and the 36K bottom of the weekly order block.If we close below the "
Tesla candle" on a high timeframe, I do believe we may be in a short-term bear market. If this happens, expect altcoins to take a dive as well.Will, OptionsSwing Analyst
Comment
Weekly swing low has failed to function as a support. Coming into the January candle close highs here - loss of this and we re-test 39.5k, then our weekly orderblock in the 30s.Comment
Monster down move today across the board. It's no surprise where we've landed after the snap-back off the lows - right at the base of the TSLA candle.I hope this has demonstrated that these types of events, though they seem like they come out of nowhere, show signs before they occur. Happy trading!
Education first, profits second.
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