Bitcoin is walking on thin ice! or is it ?

2022年1月25日

“Most men would rather deny a hard truth than face it.” ― George R.R. Martin, A Game of Thrones

It is important to realize how amazing the technology behind Bitcoin is. Regardless of the price, I don't think anyone can be bearish on the technology. In the long run, Bitcoin will one day become a six digits asset.

In this analysis, we will try to take a look at Bitcoin from a few different perspectives in order to be able to formulate an educated guess on where the price is likely heading to next.
Likewise, I will also try to present you with some interest theories on what could happen next from a High-Time-Frame and Low-Time-Frame perspective. Let's begin :-


Overview : A look back at 2021

As you can see from the chart above, Bitcoin created a high earlier last year at around 64,800 which proceeded to technically bounce at a high low level at 29,200. Many people back then -including myself- thought more downside is likely follow from the resulted price action; A bounce to the golden pocket to create a lower high before going to retest the 20,000 level after all seemed pretty logical!

On the other hand, many elliotticians were, rightfully, thinking we were in a 4th wave. And it's most likely that we head back to at least the .618-.65 at around 52,000. Everyone was waiting for break of the higher low at 29,000 to jump on a short. Or a sign of reversal to jump back on a long to the golden pocket.

At times, the sentiment was super negative and the price seemed like it was going to break -especially on july20th- and lightcrypto topped it off by showing up on UpOnly with the most bearish talk on that podcast's history. I assume people thought It is going to break down and some may have shorted at the bottom. As a result, Bitcoin being the asset we will know and love, It decided to bounce and give the first sign of reversal, giving many a clear invalidation level below and an entry starting at the 200DEMA.





Once you get the .618, you would want to be short with a stop at the .707 or thereabouts shooting for the .886 max and taking profits at the .382, .05 and the .618. Because as we established earlier, the sentiment was pointing at a lower high after that ~50% drawdown. Many of us did just that for a swing, yet the trade wasn't finalized as the price decided to push for an All-Time-High breakout later.



Going back a little, once the .618 got rejected, shorts got comfortable, with their stops at profit and they took some profits out.
At the same time, a lot of wild theory started to develop.



This cup and handle does not have the most textbook look it, but a break above the high then you buy the retest with a safe stop shooting for 90,000.
Some elliotticians, were pushing for a completed 4rth wave and now we're just going to the 5th at somewhere close to 90,000 or higher.




and more...

With those in mind, you can start to see how a shift in the sentiment started to develop. A break over the .618 would mean a likely new ATH or at least a double top.
In reality, what happened later surprised mostly everyone as bitcoin rallied above the .618, broke the ATH, created a bear trap then moved back lower.

Not only that, but it got rejected out of each retest. Bulls could not maintain the trend. Throwing almost every theory out of the way.

We can only speculate and make educated guesses that provide us with setups to profit from. No one knows what the future holds, but we can improvise to catch a profitable trade and manage it correctly.

I want to stress that everything is possible, Bitcoin could jump to 100k but could also go back to sub 20k, lower or higher than you and I could imagine.


Now, where do we stand today and what do I think ?

This brings me back to the main chart above:



Structurally, it is still maintaining a High-Time-Frame bullish structure with higher highs and higher lows. The invalidation level would be below 29,200 which is the previous higher low.
However, it is important to realize that we can also range between 60k and 30k for a very long time. We swept the high at 64,800 unpredictably so a sweep of the low can also be justified.



In fact, if we get the fibonacci retracement levels from the current ATH to the 2018 ATL we get a golden pocket just around there, and we know that bitcoin loves golden pockets and the .618.



When that happens it would be a very good high R swing. It is a very good viable option and time sensitive.
I am saying it is time sensitive because you obviously don't want bitcoin at that level for more than 2 weeks. So it is not only a good place to layer bids but it can give you a time buffer where if it gets you an entry, you don't have to wait for a stop to be hit if it gets stuck there for a bit, but you can exit to save your capital as soon as you don't get a reaction.

The alternative to that would be a break south of the double top giving you a measured move to the 14,000 area.



What is great about this area for a long, is the confluence with many other chart patterns and their measurements.



In fact if we move all the way back to that same measured move and interesting area for a long we also get a ....


61.8% ;)

Yet, we need to be mindful of the time sensitivity that comes with this area, if it is staying there for more than 2 weeks max then I am out, In fact, depends on how the price progresses there I might even exit earlier if I don't see a semi immediate bounce.

Is it possible that we never get there ?
Absolutely! As we said earlier, on a High-Time-Frame we are still maintaining a bullish structure with higher highs and higher lows.
But what I want to see before going back in a long is similar to what I wanted to see at the July 2021 low of 29,200.
I want to see the price reclaiming important levels. Mainly the 44,500 area



Because if we go up there this would mean we would be above all 4H common moving averages -ex. 200MA&EMA.- We would also be flipping bullish with a few bullish crosses like the 9DEMA and 20DMA. We would also be above the 50DMA. Most importantly we would be above the SR level there. That is when I would consider going back in again for a swing to at least the .618 then the triple top, which would be an interesting to scenario.



Either ways, you don't want to shoot to high, I would argue the 0.866 is enough for a target if I get an entry. Because this could also end up as a H&S pattern. Giving you This main chart again or a potential target to 14k.