Bitcoin - Looks Pretty Crappy Right Now - Key Levels
No if's and's or but's about it, the current price action of Bitcoin looks pretty crappy right now after a strong swing higher which we thought was leading to a broader swing higher. However taking out the 8500 level, where selling pressure gained momentum, and the push to the 6500 area, has us stepping back here.
Is this an area to add? Nothing wrong with adding a small position for the longer term, but Bitcoin is in a tough position between a break to the upside level at 8500 and a push through 6000 which could signal Bitcoin is in a broader correction and not a new bull market.
There is a minor support level around 7200 which overlaps with a major support level looking when looking at the broader picture. These are the key levels here and with current momentum looking bearishly crappy, we are just sitting back and letting the market play out.
The question currently: Is this a lower low or a failed low situation and what is the difference?
A failed low is where the market pushes below the previous low, but finds buyers and we see a series of higher highs in the shorter term, never going back to retest that low. Typical fake-out situation. However momentum is pretty bearish here so this may play out to a lower low.
A lower low is when prices decisively takes out the previous low (7300 in this case), and moves lower. We really do not have that situation yet, but there are some levels that will provide more evidence one way or the other.
A push above 8500 would lean towards a failed low situation, but until we see 9300 taken out, we have to remain cautious here. Taking out the 6500 area would signal a lower low and bring the 5500-6000 area into play.
This is why we are simply stepping back and doing nothing here, so lets step out and take a look at the broader perspective.
BTCUSD (Monthly)
The broader term bullish trend is still in play, and though we are pulling back off the 14k area, we are no where near the previous low of 3200. Can we get there?
The 7231 level is the 61.8% retrace of the bullish swing higher, and this is an area where we may see a bullish reversal. However markets do not care about anyone's Fibonacci levels, the more important level here is 6000.
A decisive move below 6000 may imply we are in part of a broader corrective structure and brings into play the 3700 area and potentially a retest of the low or a swing lower. Yet this is getting ahead of ourselves as we are 20% above the 6000 level, and there is a lot of support in this area.
Yet it is possible. The bullish thesis is the market got ahead of itself, is retesting the broader trend higher where we can look for a broader swing higher.
So what do we do here? That is simple, we wait and look fore more evidence one way or the other that the market is in a broader correction or the start of a broader bullish swing. Even if this is part of a broader correction, the long term structure and thesis is still in tact.
What have you done for me lately?
As a long term Goldbug, these types of markets are not uncommon. It often takes months or even years for a broader term correction or consolidation to play out. I am not convinced that this is a broader correction, but do not ignore the probability that it may be.
I am still of opinion that this is part of a broader swing higher towards the previous high or mid 20k area. However, as we have mentioned to our members, the recent price action was not good and we can not ignore this type of selling momentum.
With the market showing mixed signals, and in a tough position we simply step aside and look for trades in other markets like Gold which we are currently long.
Gold
We have a similar situation and chart pattern with Gold nearly identical to the current Bitcoin price action. Had an interim peak and are into a four month long consolidation. We also have what we discussed here as a potential failed low.
In order for a failed low to be really in effect we need to see the 1535.0 level taken out. In the shorter term taking out the 1485.0 level increases the probabilities that this is a failed low situation and if you are not in Gold, any pullback off the 1490 area and bullish reversal would be a potential long signal.
Like Bitcoin Gold has pushed out of its consolidation at 1350 increasing the probabilities that this is a broader swing higher. Bitcoin taking out the 6000 level is a similar move. Both these levels are now critical to hold to keep the bullish thesis in play, it is simply that Bitcoin is closer to the major support level and Gold is attempting to push higher off a minor support.
Unfortunately due to a family emergency I was out of town for 3 weeks, so no I was not hiding from my previous post. Either way the market did not agree with my take and in the end only the market is right.
No point in making excuses, or blaming the whales, or events in China, we simply step back, reassess and look at specific levels for further evidence one way or the other.
Is this an area to add? Nothing wrong with adding a small position for the longer term, but Bitcoin is in a tough position between a break to the upside level at 8500 and a push through 6000 which could signal Bitcoin is in a broader correction and not a new bull market.
There is a minor support level around 7200 which overlaps with a major support level looking when looking at the broader picture. These are the key levels here and with current momentum looking bearishly crappy, we are just sitting back and letting the market play out.
The question currently: Is this a lower low or a failed low situation and what is the difference?
A failed low is where the market pushes below the previous low, but finds buyers and we see a series of higher highs in the shorter term, never going back to retest that low. Typical fake-out situation. However momentum is pretty bearish here so this may play out to a lower low.
A lower low is when prices decisively takes out the previous low (7300 in this case), and moves lower. We really do not have that situation yet, but there are some levels that will provide more evidence one way or the other.
A push above 8500 would lean towards a failed low situation, but until we see 9300 taken out, we have to remain cautious here. Taking out the 6500 area would signal a lower low and bring the 5500-6000 area into play.
This is why we are simply stepping back and doing nothing here, so lets step out and take a look at the broader perspective.
BTCUSD (Monthly)
The broader term bullish trend is still in play, and though we are pulling back off the 14k area, we are no where near the previous low of 3200. Can we get there?
The 7231 level is the 61.8% retrace of the bullish swing higher, and this is an area where we may see a bullish reversal. However markets do not care about anyone's Fibonacci levels, the more important level here is 6000.
A decisive move below 6000 may imply we are in part of a broader corrective structure and brings into play the 3700 area and potentially a retest of the low or a swing lower. Yet this is getting ahead of ourselves as we are 20% above the 6000 level, and there is a lot of support in this area.
Yet it is possible. The bullish thesis is the market got ahead of itself, is retesting the broader trend higher where we can look for a broader swing higher.
So what do we do here? That is simple, we wait and look fore more evidence one way or the other that the market is in a broader correction or the start of a broader bullish swing. Even if this is part of a broader correction, the long term structure and thesis is still in tact.
What have you done for me lately?
As a long term Goldbug, these types of markets are not uncommon. It often takes months or even years for a broader term correction or consolidation to play out. I am not convinced that this is a broader correction, but do not ignore the probability that it may be.
I am still of opinion that this is part of a broader swing higher towards the previous high or mid 20k area. However, as we have mentioned to our members, the recent price action was not good and we can not ignore this type of selling momentum.
With the market showing mixed signals, and in a tough position we simply step aside and look for trades in other markets like Gold which we are currently long.
Gold
We have a similar situation and chart pattern with Gold nearly identical to the current Bitcoin price action. Had an interim peak and are into a four month long consolidation. We also have what we discussed here as a potential failed low.
In order for a failed low to be really in effect we need to see the 1535.0 level taken out. In the shorter term taking out the 1485.0 level increases the probabilities that this is a failed low situation and if you are not in Gold, any pullback off the 1490 area and bullish reversal would be a potential long signal.
Like Bitcoin Gold has pushed out of its consolidation at 1350 increasing the probabilities that this is a broader swing higher. Bitcoin taking out the 6000 level is a similar move. Both these levels are now critical to hold to keep the bullish thesis in play, it is simply that Bitcoin is closer to the major support level and Gold is attempting to push higher off a minor support.
Unfortunately due to a family emergency I was out of town for 3 weeks, so no I was not hiding from my previous post. Either way the market did not agree with my take and in the end only the market is right.
No point in making excuses, or blaming the whales, or events in China, we simply step back, reassess and look at specific levels for further evidence one way or the other.
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