I still believe there is risk of a much larger move down. I sold at $15500 around Christmas. Bought back around $16200 and then got stopped out on that trade with a daily sell signal.
Since that time, bitcion has trended down in a . So I'm waiting for confirmation before making another move. Here are posibilities.
1. Bitcoin bounces here, picks up and marches to $25k
2. Bitcoin moves up and tests the green upper triangle around that orange circle, then moves down to complete the triangle before moving back to new highs.
3. We got a long complex consolidation that will ast another 6-10 weeks. (less likely but not impossible)
For this to happen in the short term, bitcoin has to break the top red line and stay above it. Look for on the break showing signs of big money buying the break.
1. The holds, we break through the lower green triangle .
That would be a sign that the small blue is just a and this move up the last 24 hours is a bull trap.
Right now, we are at an important point. So far today, bitcoin has taken 2 shots at breaking that red and been rejected. We need to get above it and stay above it over the weekend.
If bitcoin drops below bottom green , there is weak support. If we start falling fast, we could fall to $10k area or below. Most of the strong support is in the $7500-$9000 area.
This my biggest concern. Missing out on a $1k move doesn't bother me at all. But I don't want hold my trading position if we drop 30-50%. So while I understand the buy the dip mentality, traders need to be cautious here.
If we do get a big drop, it will make for an amazing buy. I also think some alt coins could be on sale. We'll see.
The more times a market tests that support, the weaker it gets. We still have sell signals on the daily chart. The TD sequential on the 4 hour topped on an 8, signalling a reversal. While it looked like we could turn 2 days ago, today's candle is now below yesterdays low which invalidates any buy signal regardless of system you use.
I will continue to protect capital and wait this out. We could test the bottom triangle again, find more buyers and explode up. But if we break $13k, I get concerned that panic could set in and we get a sell down to much lower levels.
Just following other respected traders, $12.5k to $13.5k are their panic levels so if those break I see a lot of traders will get out and that could lead to another impulse lower.
I believe a lot of people are going to get scared and stop buying the dips. If we retrace down below $11k, there will be huge stop loss orders. If those get hit it could drop us to $8500. But that may not happen today.
I dont' think its over. A Red candle like this is almost never the low. I suspect a bounce for maybe a few days then we revisit lows. It makes more sense at this point to retest $8500. That is where I look to rebuy a partial position. I'll also watch the market for other signals to buy more. And maybe it could go lower.