Bitcoin – Watch for the Roll Back – Future Traders Stuck

After hesitating towards the close of day, Bitcoin found its legs and broke through the 6500 target level, and is now has enough momentum to carry itself into the mid 7k’s.  With short interest still elevated, there is also the potential for Bitcoin to push into the 8k area.  However don’t count out a “roll back” this weekend.

Futures:

Futures closed Friday, and now those that are short are having a bad weekend.  I have been in a similar position with with options.  The market closes, news comes out, hammers your stock and since the options market is closed, you have a long long long long weekend.  Many XBTC futures traders are thinking just that right now.  If the banks are on the wrong side of that trade, expect them to “roll back” the price.  They also do not want to lose traders, and this type of move can scare traders away from a market.

Holding 1 contract short at the close would be in the hole $1800 at this price.  Market makers often take the other side of a trade and the market relies on them to provide liquidity.  They are not going to put themselves in a position to take a huge hit.  Look for a selloff tomorrow in Bitcoin to push closer to the futures close of 6358.   The good ole large operator roll back.   Had this theory for months now, tomorrow is a big test for the theory.


BITCOIN

Clean breakout of the 6500 level and the slope of the fractal trends continues to elevate.  This type of sloping up trend is not sustainable for a long period of time, and we will get a pullback.  The herd which was only weeks ago, calling for a correction back into the low 4k’s has now set their sights on the alt-coin market after missing the broader rally in Bitcoin.   Calls of 7500 to 10k are now being posted faster than shorts can exit a burning building.

This is an initial sign of a top, so do not get caught up in the hype.  We also do not want to underestimate what we have been saying for months now, that larger operators are accumulating prior to the release of trading on regulated platforms.  This is truly Bitcoin’s IPO in a traditional sense.

So there is the potential for the rally to continue, but eventually it will top, pullback,  and this is where we can look to take larger positions.  This clearly confirms the market has resumed a bullish trend and gives us plenty of opportunity to step in.

Long Term:

Our year end target of 9500 may come earlier than later.  Over the longer time frame it is quite possible to see Bitcoin hit the 25-35k area.   After the rally from 1500 to 19k in 2017 this is not a moon shot by any means.  We are initially looking at the 9700 then 15,700 levels.  

Mid Term:

Until we see more evidence of a top, we have a broad range of support between 4900 and 6k.   There is a good probability in the that we see 5500 again, but under 5500 becomes less probable if Bitcoin pushes through 8k.   If 7k prints a top, then 5k becomes the likely support level.  To be faintly honest, 4500 is becoming a long shot, if I had to put a number on it, less than 10% here.   Still a chance but nothing to count on.

Short term:

Look for a pullback between 6000-6500 and a reversal to the mid 7k’s or low 8’s completing the short term cycle.  This is inline with the futures market close.     A break of 5800 makes this less probable, but there may be one more swing left in Bitcoin before a retest 5k.  There is also the possibility Bitcoin continues higher here as well.  The shorter the time frame, the more noise there is, so it is best to focus on the longer term targets and position accordingly.  

This rally will eventually tire unless we see trading platforms start opening up or put out a big announcement this week.  Sentiment has turned from pessimism to optimism though it is far from euphoric yet.  This may imply there is more upside, but for the investor or position trader, it is simply wait to buy the dip.

Summary:

Forget about the interim noise on smaller time frames.  Daily price fluctuations can turn sentiment on a dime.  We saw this last week with the stock and Forex markets where whip saw was the theme for the week.  It is important to focus on broader targets and position to get the most out of a broader move, and not to try and time perfectly every move.

In the end you buy into weakness and sell into strength, this was a strong move, and there is no reason not to trim some out here, and look to buy the dip, or just simply wait to add to current positions.  By nature you are going to miss some rallies and miss some dips.  It is just part of the game.

There will be plenty of opportunities to trade in the future, the pasture is wide open and there is a lot of room left to run.

 

This is a Free Member article. To receive email notifications when new articles are available, click here.
6 Responses
  1. jlhequities

    I like it, 6200 then 7500-9k, back to 5300, then 13,500, back to 9k.
    20k was wave 1 of the cycle count IMO.
    We are starting wave 1 of wave 3 cycle. The one that wows the crowd.

  2. mvleeshouwers

    Hey guys,

    as you all probably noticed a pretty descent sel off was absorbed yesterday, kinda messing up my strategy. Whether or not this will go lower in the short term, only time will tell. but shouldn’t we see this as a sign of strength?

    1. Andrew Gonci

      Hi MV, I think this is now a buy the dip market. Those calling or waiting to buy sub 6k are likely to be holding an empty basket. Absolutely a sign of strength.

Leave a Reply