Bitcoin: A Retest of All Time Highs is ImminentIn this post, I'll be going through Bitcoin's daily chart, with references to my tweets to not only demonstrate how I was able to anticipate a sharp drop and bounce at $42k during the flash crash, as well as why I think our next stop will be retesting all time high levels.
Disclaimer: This is not investment advice. This is for educational and entertainment purposes only. I am not responsible for the profits or loss generated from your investments. Trade and invest at your own risk.
Past Price Action Analysis
- From Feb. 2021 to Apr., we continued to form higher highs and lower highs, in which a rising wedge pattern was created
- This could also be seen as an ending diagonal from the perspective of Elliott wave theories.
- We saw an all time high formation at $64.8k, and a drop down to $28k
- During the bottoming range, we had a phase of reaccumulation, from the perspective of the Wyckoff Theory.
- For more information on why I saw this as a reaccumulation before another bullish rally, as opposed to the end of the bull run, click on the chart below:
- The consolidation range had a support of $28k, and resistance of $42k.
- We then broke out of that range and continued to rally upwards, forming higher lows and higher highs
- Within this price action, we could see a parallel channel forming
- Around the beginning of September, we broke down this channel, and while we did continue to make higher lows and higher highs, this price action was interpreted as a pullback retesting resistance, as opposed to a continuation upwards
- As such, I knew that a rejection from the support-turned-resistance parallel channel would lead the price to retest its lows
- Additionally, the price had bounced to the 0.618 Fibonacci resistance
- So I was expecting a correction down to the $40-42k levels, but given Bitcoin's price, $40k seemed much less probable than $42k.
- As we wicked down to $42k regions due to leveraged positions getting cleaned out, I knew that there was a high chance the bottom was in.
Current Situation Analysis
- So what am I seeing for Bitcoin now?
- There is a reverse head and shoulders continuation pattern that is currently in play
- The left shoulder formed in mid-April, and the head formation is marked by the drop from $60k to $28k, and the reaccumulation phase
- The current price action is demonstrating the formation of the right shoulder
- And as we break through key resistance levels, there's a high chance that we will revisit all time high levels in September/October
- Once we break previous all time high levels, Bitcoin might start showing a parabolic trajectory once again.
Conclusion
If you carefully read the analysis above, you'll notice that I never really (and never could) accurately predict the market. I was simply looking at the overall market structure and macro cycle, with an understanding of key support and resistance levels. Patience is the magic element that helped me make tens of thousands of dollars in the past few months, as I know from past experience that Bitcoin can drop 30-40% during its insane bull runs. I hope my analysis was helpful in demonstrating how I was able to prepare for Bitcoin's insane price action, and how I was able to take advantage of it.
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