Bitcoin Long in Play - What Are the Possibilities?

As I stated in my last post, I identified accumulation, recognized the potential short squeeze and took a long position. The squeeze was so violent that I am now in a position of strength. So I will remain long and try to hold it until I see signs of weakness or until I get stopped out.

I took 10% profit at $8000 and have a partial stop at $7400 in profit and full stop out at $7100. Both those areas would put me in full profit. Below that area and its too risky.

My Expectations and Bias

My bias is that we are still in a bear market. My expectation is that we will be in a bear market for a few more months. However, there are 2 things to remember.

1. Bear markets can still have powerful rallies.
2. Its possible bitcoin recovers faster than most markets and we have already seen this lows.

My bias helps me make trade decisions. So I'm short term bullish (coming weeks), medium term bearish (coming months) and long term bullish (coming years). I won't switch to medium term bullish until I see signs of a reversal such as a weekly turn, weekly swing low, etc.

To put it in a form of probability, I believe there is a 75% chance that we bounce here then resume the downward trend and find a bottom this summer. 25% chance that we have seen the lows. I have to be ready for both situations.

The Bearish Case: Red Overlay 75% Chance

A lot of people I know, even good traders, seem to be looking for $8500-$9500 then expect to move down.

This seems like a good area to short and it might be exactly what happens. However, I can say that on every swing up and down since November, I have underestimated how far bitcoin will move. I also think that after a 15 day accumulation period, smart money is more likely to push it higher than people expect. Time is going to be a critical component. I just can't see a 2-4 day bounce that breaks to new lows. I would expect this move to take 7-15 days IF this is indeed a bear market rally.

So at this point I can't give a target of short at $8k or $9k or $10k. I'll have to wait until I see signs of exhaustion. But my gut is telling me that we could climb over $10k and get all the bulls super bullish again. I actually would not be surprised to see bitcoin go up to $13k then go down to make a new low. Not as likely but not impossible. I think both scenarios would absolutely kill both bulls and bears.

Bullish Case: Green Overlay - 25% Chance

We start moving up build momentum and eventually make a swing low then eventually have a strong breakout.

Notice the Differences

Price action tells us a lot. Everyone wants bitcoin to just blast off and go straight up. THIS IS NOT HEALTHY. Notice the red overlay it shows price going almost straight to $10500 without a pullback. This would be a strong sign that we are going lower. If you haven't figured it out, pumps are dangerous. Every single huge pump in crypto ends with a sad story. If you want the market to have sustained move, it needs to stair step up.

When markets move straight up, its done to sucker in new longs. Smart money just pulls orders and tries to get everyone short and just squeezes them. That is not real buying its just manipulation.

If this is a real bull move, then smart money wants to accumulate. Theyl buy it until it hits resistance, then take profit and look to buy back on pullbacks. Move up, pull back, consolidate, move up. We might see a long slow move to that takes awhile to get to $10k. We'd see a swing low. We'd see some boredom set up. Up at a low controlled trajectory. Volatility would be reduced . Consolidations would last longer. THIS would get me bullish . I just don't think its quite ready for that yet.

**Keep in mind that it will not work out exactly like these 2 overlays. They are just examples. And I can certainly be surprised so you don't trade off the overlays. You just mentally prepare for different scenarios. Price action and structure will be the guide.

Bitcoin just had a breakout of the ascending triangle. Now we let price action tell us what happens next.

The bullish green scenario is that each new breakout backtests the breakout then consolidates at a steady incline.

The bearish scenario is a steeper channel that wedge to the top. That is a sign that smart money is not taking profits and just trying to get retail traders to FOMO in so they can reset shorts.

So I'd like to see a test $8220 then consolidate the move higher. Dropping below $8100 would be a bad sign.I moved my partial stop to $8000 and my full stop at $7300 but I will reverse if we see no pull backs here.

Got perfect backtest of the breakout. This is bullish and shows buyers were ready to defend price. Could get more tests but holding this level and consolidating suggests higher prices.

I was hoping to see a bigger correction so I could add to my longs and provide a structure for a longer bull run. However, we just went back to the .328 of the last wave.

Big money will not fomo in. They buy, sell resistance, let it correct, re-enter. It's a bullish accumulation with back and fill that drives a strong bull market.

When a market goes up with no pullbacks its just short covering, whales pulling orders and not the real buying we need. Look at these moves. Sideways nothing then big spikes up. That is not a healthy bull market.

Can it turn into one? Sure. With some pullbacks and slower moves up, maybe long term bulls will start accumulating, but right now it does not look good.

Just like the move from $8500 to $11700 that never gave you more than .328, it's a strong sign you will eventually turn down. With that said, I still have a feeling we go higher than most think even its just a series of short squeezes.

Still not to late come test that $7400 to $7600 area, but my gut feeling is that we won't.

No correction yet, very illiquid market. My guess is that the only buying is from people wanting to buy altcoins. And based on all the altcoin charts, I think we have another 5-15 days left before this market is ready to turn down.

For now I think we keep slowly moving up with only small $100-$300 pull backs. We might break down that wedge, but I don't know if we'll have much of a pullback. I'm guessing bitcoin works its way up toward $9k and that 50% fib. From there we'll see how it looks.

The most bullish thing to happen would be to correct down to $7500 area between 50-65% as that would be a sign that smart money is trying to get better prices for a 5 wave move higher. I don't think we'll just move straight down. More likely we find support, bounce then break down support. I did take a partial profits and partial stop at $8000. So a move lower would allow me to add it back, but no guarantees we fall further.
Bottom in summer ? The general expectation is a pump in summer. That's my base for saying that we won't go lower now. In summer Goldman Sachs will have opened its trading desk which means they will have bought before to make money on the back of their clients.
rzmb44 ickylevel
@ickylevel, Ultimately, I believe that these banks are going to be the big driver of the next bull phase. But before we move up, I believe the probability is greater that this market goes through a low volatility sideways accumulation phase. Most of the banks are just starting their trading desks. They will need time to take bitcoin from retail traders.
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