Projected Bull Run Based on Recurring Price Action - Bitcoin
As can be seen in the blue box on the left, following the December 21st dump, a head and shoulders pattern formed which lead to another sell-off. After the sell-off, a bull run began (1-5) that lasted almost a week before more substantial sell-off occurred. The recent dump that occurred on the 15th of January has given rise to remarkably similar price action as depicted in the blue box to the right. Price activity is also now beginning to look similar to the price activity in late December that turned out to be the beginning of the 1 week bull run. I have sketched out what may occur if a similar bull run plays out over the next few days: After a brief drop in price to around 10,400K (2), bitcoin would break the regression line (dotted line) and stall at around 12K (3). Bitcoin would then drop to test the regression line as new support (4) before making a final run to test the resistance line that has formed from the 17th of December (5).
The most attractive buying opportunities occur at 2 and 4: Buying at around 10,400k with a stop loss a bit below 10k (2) and buying at the retest of the regression line with a stop loss a bit below the regression line (4). However, since there is no guarantee that a bull run similar to the one that occurred at the end of December will play out, buying at 2 is riskier. If price does bounce at around 10,400k and stall shortly above the regression line, then purchasing at the retest of the regression line would be the more attractive option for cautious traders, as the outlined bull scenario will have been given more time to prove itself. The drawback, of course, is that you miss out on a larger portion of the run.
This is my perspective on what I see as potentially happening over the course of the next few days. Price action may not play out as it did during the brief bull run that started at the end of last year, or even if it does, some event may hinder this scenario from playing out fully. Fundamental analysis is important. CME futures contracts expires on the 26 of January, for instance.
Note: I used an Elliot wave tool to sketch out the bull scenario, but I did this only to highlight price action in a way that presents the information clearly - both visually and in writing. I didn't count waves or make sure that wave counts follow conventional rules, this is not an Elliot wave analysis of price action.
The most attractive buying opportunities occur at 2 and 4: Buying at around 10,400k with a stop loss a bit below 10k (2) and buying at the retest of the regression line with a stop loss a bit below the regression line (4). However, since there is no guarantee that a bull run similar to the one that occurred at the end of December will play out, buying at 2 is riskier. If price does bounce at around 10,400k and stall shortly above the regression line, then purchasing at the retest of the regression line would be the more attractive option for cautious traders, as the outlined bull scenario will have been given more time to prove itself. The drawback, of course, is that you miss out on a larger portion of the run.
This is my perspective on what I see as potentially happening over the course of the next few days. Price action may not play out as it did during the brief bull run that started at the end of last year, or even if it does, some event may hinder this scenario from playing out fully. Fundamental analysis is important. CME futures contracts expires on the 26 of January, for instance.
Note: I used an Elliot wave tool to sketch out the bull scenario, but I did this only to highlight price action in a way that presents the information clearly - both visually and in writing. I didn't count waves or make sure that wave counts follow conventional rules, this is not an Elliot wave analysis of price action.