Don't Lose Sight of The Bear Market — in Bitcoin! (BTC)
Updated
Hi friends! Welcome to this update analysis on Bitcoin! Let's get right to it! Looking at the four hour chart, you can see that after BTC broke down from the false flag yesterday, it got a bounce off of the 200 EMA (in orange.) Since then, BTC has rolled back over in what appears to be an attempt to form a head and shoulders pattern. However, on the opposite side of the spectrum, we have sustained a breakout above the top of the downtrend channel (ib black) and we have also found support on the top of the 200 EMA (in orange.)
So, we've broken out, and found support on the 200 EMA, but we're now forming a head and shoulders pattern on top of it, while the momentum is printing a bearish divergence, and buy-side volume is diminishing. When you assess the market this way, it's clear that there is a war going on, as the bulls and the bears struggle for control. Everyone and their mother, is getting super bullish right now. However, this is still a bear market downtrend. We have NOT produced a higher high. We are still forming lower highs and lower lows in BTC. So, I would be very careful proclaiming that the bottom is in. With that said, we could continue to rally from here, but I doubt that will be the case. Simply because we never tested the top of the downtrend channel for support. I know that isn't mandatory, but in a powerful bear market, it's good to see that sort of confirmation, to prove that former resistance is now support. We appear to be doing that on the 200 EMA, but in the form of a bearish pattern (the head and shoulders.) So, there truly isn't an ideal trade setup right here.
Even if BTC manages to rally higher, the upside appears to be limited. Just above us is the 1200 EMA (in purple) which is equal to the 200 EMA from the daily chart. As you can see, that level was highly resistive last month, so it could be just as resistive going forward. Furthermore, if BTC was rejected at the 1200 EMA, it would still be a lower high so we would still be in a technical bear market downtrend. With that said, I would rather be a buyer of BTC on a confirmed breakout above the 1200 EMA, than a buyer right here. The risk/reward ratio would be much higher, if you bought at a breakout above the 1200. However, I don't really want to be a buyer at all, because I don't believe that the bottom is in. I'm much more interested in sell-side trades. The technical bear market still exists, and there is absolutely no denying that. Yes we've bounced, and had a nice rally, and even broken out above the downtrend channel, but all of those things have happened since the all time high, and all of those things have turned out to be continuations of the bear market downtrend.
At this point, BTC could easily roll over to test the top of the downtrend channel, or the rising black trendline. So stay nimble, and don't get caught up in the hype! If you want to be a buyer, that's great. Why not wait until there is a better risk/reward opportunity, so that you can protect your capital? Don't let the rabid bullishness cause you to lose sight of the bear market. We still have no proof. I'm the master of the charts, the professor, the legend, the king, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-Magic loves you-
-JD-
So, we've broken out, and found support on the 200 EMA, but we're now forming a head and shoulders pattern on top of it, while the momentum is printing a bearish divergence, and buy-side volume is diminishing. When you assess the market this way, it's clear that there is a war going on, as the bulls and the bears struggle for control. Everyone and their mother, is getting super bullish right now. However, this is still a bear market downtrend. We have NOT produced a higher high. We are still forming lower highs and lower lows in BTC. So, I would be very careful proclaiming that the bottom is in. With that said, we could continue to rally from here, but I doubt that will be the case. Simply because we never tested the top of the downtrend channel for support. I know that isn't mandatory, but in a powerful bear market, it's good to see that sort of confirmation, to prove that former resistance is now support. We appear to be doing that on the 200 EMA, but in the form of a bearish pattern (the head and shoulders.) So, there truly isn't an ideal trade setup right here.
Even if BTC manages to rally higher, the upside appears to be limited. Just above us is the 1200 EMA (in purple) which is equal to the 200 EMA from the daily chart. As you can see, that level was highly resistive last month, so it could be just as resistive going forward. Furthermore, if BTC was rejected at the 1200 EMA, it would still be a lower high so we would still be in a technical bear market downtrend. With that said, I would rather be a buyer of BTC on a confirmed breakout above the 1200 EMA, than a buyer right here. The risk/reward ratio would be much higher, if you bought at a breakout above the 1200. However, I don't really want to be a buyer at all, because I don't believe that the bottom is in. I'm much more interested in sell-side trades. The technical bear market still exists, and there is absolutely no denying that. Yes we've bounced, and had a nice rally, and even broken out above the downtrend channel, but all of those things have happened since the all time high, and all of those things have turned out to be continuations of the bear market downtrend.
At this point, BTC could easily roll over to test the top of the downtrend channel, or the rising black trendline. So stay nimble, and don't get caught up in the hype! If you want to be a buyer, that's great. Why not wait until there is a better risk/reward opportunity, so that you can protect your capital? Don't let the rabid bullishness cause you to lose sight of the bear market. We still have no proof. I'm the master of the charts, the professor, the legend, the king, and I go by the name of Magic! Au revoir.
***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***
-Magic loves you-
-JD-
Note
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