Bitcoin – Don’t Count The Bulls Out Yet

Overview:

The Bitcoin pullback was simply short term manipulation IMO, and there is much evidence for this theory.  Regardless there were signs and red flags everywhere, and this pullback is simply to flush out late bulls and shorts, for a potential move higher.  Yes the bears are out in full force, however, there are still too many bears and pessimists for the market to make a significant move lower in my opinion.   There is likely still one more rally left before a mid term correction.

Bitcoin

Bitcoin - Still on the Move

The sudden pullback was bought up swiftly and if we can close above the 7250 level, this may mark the low in the interim.  However a close below 7250 or a continuation after the close today lower would make a case to push below 7k, where I will be looking to add.  Our interim target is 9700-10500 before we see a broader consolidation and this may not be a strong pullback, it could be shallow.

We raised our Year End Target to 15k from 9500 so the risk is missing the broader move.  For this reason we have altered our portfolio strategy and are looking to add in the near term.

Technically Bitcoin can retest the 5900 level and the bullish cycle still in tact.  Taking out the 7250 level would bring the low 6k’s into play, but a push above 7750, and if it sticks, we are less likely to pullback and more likely to make an attempt at 9100 or at least retest the previous high.

The next day or two will provide some better insight as the structure develops, so at this time we are simply guessing and looking at levels to either confirm a bullish swing, or increase the likely hood of a push lower.

Either way I am looking to add to my long position and will be doing so in an aggressive fashion.  We trimmed out some positions Thursday morning prior to the dip, as the market was just too vertical.  It needed a breather, but this does not imply a major correction is looming any time soon.

Short Signal?

I was asked recently about a short signal and if there is one.  There is not, all we have is one bar, and though it did move below 6795 , there is no substance to the move.  In other words, it has not stuck and this could simply be noise.  We also saw buyers step in quickly buying the dip.  It would have to take it out 7250 and a short signal emerge as a continuation pattern, but I do not see this happening.

Not that it can’t happen, but I see this as an unlikely scenario, and many that are looking to add in the mid to low 5k area may be disappointed.    We spoke about this months ago, that this is how the bull rally will go.

Early Bull Markets

Fall back in time to the pre 6000 dip to 3200.  Many were saying they were waiting for 4500 -3500 where they would add.  Bitcoin fell quickly and the same people that waited got a case of cold feet.   They then lowered their levels to 2500 and lower, and this never happened.  They simply missed a buying opportunity.

There were 3 months worth of buying opportunities in the 3k area.  Few did, as they were “scared money” thinking it would push lower.  Once it took out 4500, the same people thought, ohhh now I will buy at 3500, but this never came.  Then it took out 5k, 6k, 7k and 8k and scared money still hoping for a pull back to 4500.  This is simply a low probability outcome.  Not that it can’t happen, but it is a low probability.

Yet the “expert” analysts are now calling for a big move lower.  I just do not see it, this is a bull market and the dips are buying opportunities.  The same scared money that did not buy lower will continue to sit and wait.  Only when we hit 9000-10,000, the emotional feelings of FOMO will hit and that is when they will add.  This will be the catalyst to propel us toward 12,500-15,000.

It doesn’t just happen in cryptos, it happens in all markets.  This is something we wrote about months ago, and looking at the sentiment across social blogs, it appears to be happening.  History simply repeats.

Summary:

The structure and framework is that of a broader bull market.  The potential for 30k or higher, is definitely a possibility over the next 18 months or so.  This is all about structure, and the structure being created, is supportive of new all time highs, not a correction to 1500.  

In closing, this is a buy the dip market, not hope for lower prices that may never come.  Stepping into positions is a great way to average in, on dips, allowing for further selling pressure to push lower where one would add some more.   Do not get caught up in the “major correction” hype.  The structure does not support this type of move.  Not that it can’t happen, but it is unlikely. 

We never know what the shorter term moves will be, so focus on the broader structure.  Nothing wrong with adding a little here, and fade the pullback.  This is why it is important to have cash on deck.  Levels of importance here are 7250 and 7750, but it has to take the level out, not just pierce it as it did last night.

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3 Responses
  1. Iluvatar

    Hey Andrew,
    I’ve been following SC for over a year now and am happy to see that I’m finally starting to make some of the same calls from my TA as Marc and you are. Thank you for your comprehensive posts on TradingView, and here, they have helped me learn and develop a more structured approach to investing.

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