BTCUSD update: Price finds support within the 8171 to 4983 zone and attempts to retrace higher. In this report I am going to discuss the next resistance level and some possibilities as buyers return to this market.
As I wrote in my previous report, 8171 to 4983 is the largest magnitude .618 support area based on the entire price structure of this market. There is no other support area more relevant than this one. As suspected, buyers are slowly reentering the market as the Senate hearings put the general sentiment at ease. The general sell off is nothing more than a typical over reaction, and now is the time to watch carefully for the follow through as the market firms up.
Keep in mind, as bullish as I have been and continue to be, this market is not out of the clear yet in terms of bearish structure. 8427 is the first level that needs to be cleared which will indicate that the current bearish leg is more than likely complete. From there, price is likely to test the 9887 to 10836 resistance zone (minor .618 of resent bearish swing) which is somewhat in line with the broad bearish trend line. This minor resistance serves as an initial target to lock in profits for any aggressive longs taken during the recent lows.
What will determine if a broader momentum change is in effect is the next bear test. What makes these lows very tricky is there is no way to know if this is the beginning of a broader move up, or another head fake that will lead to a retest of the lows. If you are long from more aggressive entries, the best thing to do in this situation in my opinion is to now wait for supportive structure to unfold if you want to add to your position. There are three scenarios to watch for: the shallow pullback (often a couple of very small range candles), the higher low, and the double bottom (retest of 6K).
If this market conforms to one of these scenarios, and does not make new lows, then there is a better chance a broader bullish move is in play rather than a bearish retrace back to lower lows. Also the fact that price is firming in a major support zone adds a lot of weight to any bullish formation that appears.
In summary, being aware of risk is more important than rewards. This market still has room to test the low 7Ks or even 6K, but is less likely to go beyond that. With this in mind, you can better prepare for buying opportunities and manage risk as the market chooses its path. Choosing to be aggressive (buying into weakness) or conservative (buying upon structural confirmation) is all dependent on your risk profile and personality. In my case, I am long from an average price of 10800. I am open to adding but only on confirmation of structure. Playing the bigger picture in this way requires the patience and discipline to stick to the overall plan and not be swayed or shaken by immediate price movements. If you find yourself reacting to every little data point in this market, it means you have not chosen a time horizon. Start with the big picture and small size, that is a simple and effective way to keep probabilities and risk much more favorable.
Nice review of the market but if we see weekly charts we can see 2 to 3 weeks of bearish trend before going up
secondly if we apply Elliot waves principle on daily charts we'll find the only one phase of 5 big waves downtrend is complete now we are in abc correction upwards & second phase of 5 down waves can get us to 3500 to 4000 area? or maybe 4700 as its a very strong support what are views about it?
@Kotaiba_Watted, Yes itll correction is only done half way of 5 waves after going up for a while well be in new correction phase
mightytrader
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@umairceo, @Kotaiba_Watted Everyone is so eager to jump back in. I agree and think it can go much lower. If the crowds are expecting a bullish reversal, then I will expect the opposite. I am out until I see more evidence.
However, nothing wrong with daytrading! :)
umairceo
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@mightytrader, yup its better to be safe then poor its not about crows its about trend I guess 8.3k is the best price to sale btc & save some money to buy back at 5k I am doing the same :)
if we see weekly charts we can see 2 to 3 weeks of bearish trend before going up
secondly if we apply Elliot waves principle on daily charts we'll find the only one phase of 5 big waves downtrend is complete now we are in abc correction upwards & second phase of 5 down waves can get us to 3500 to 4000 area? or maybe 4700 as its a very strong support what are views about it?
mightytrader
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@umairceo, I am very new to applying EW and I don't yet trust my ability to make trading decisions off of it. However, I agree that the price can drop in half again and even as low as $1500 (unlikely but... possible!). But when? Idk. I still hold some BTC to trade with (mainly alts) in order to earn more Bitcoin. But I am keeping 80% of my profits from this past cycle in USD and only put some more in IF the market either proves it will continue bullish or BTC goes even lower so In can buy more to hold for years.
I believe in Bitcoin so I trade volatile altcoins to increase my BTC supply. So, if BTC goes lower or higher in USD doesn't matter as long as there is volatility in other coins.
But for me to put more USD into it, I will wait. ;)
umairceo
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@mightytrader, wow sounds like a strategic trader good
secondly if we apply Elliot waves principle on daily charts we'll find the only one phase of 5 big waves downtrend is complete now we are in abc correction upwards & second phase of 5 down waves can get us to 3500 to 4000 area? or maybe 4700 as its a very strong support what are views about it?