Bitcoin Getting to Another Critical Level

COINBASE:BTCUSD   Bitcoin / Dolar
After a strong move down, bitcoin has been in a choppy consolidation. The big question. Is it going to move up to new highs or is it going lower?

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 bearish channel . So I'm waiting for confirmation before making another move. Here are posibilities.


1. Bitcoin bounces here, picks up volume and marches to $25k
2. Bitcoin moves up and tests the green upper triangle trendline 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 bearish channel and stay above it. Look for volume on the break showing signs of big money buying the break.


1. The Bearish channel holds, we break through the lower green triangle trendline .

That would be a sign that the small blue trend line is just a bear flag 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 trendline and been rejected. We need to get above it and stay above it over the weekend.

If bitcoin drops below bottom green trendline , 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.
Komen: So we got up over the trendline. It looked promising, but quickly ran out of buyers. So got above bearish trendline but did not stay above and did not get big buying volume. So here we are again in the $13k-$13.5k area for the 7th time in the past few weeks.

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.
Komen: BTC broke panic levels. I'm not seeing good volume on this retrace. So at this point, its a matter of waiting to see where we settle. In these situations, its hard to predict how far we can go.

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.
Komen: Amazing to watch as it looked like big money just drove down every dip that was bought. On GDAX, it finally ran out of retail buy orders and stalled for 10 minutes. Then the whales came in and bought from $10k area.

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.
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