The correction off the 57K peak was a potential warning that this market may be going into a Wave 4 consolidation. This doesn’t make us bearish but it does call for profit and risk adjustments. To confirm that price is in a broad consolidation (similar to Gold), the 37K support needs to be compromised which is a low probability at this point.
This is why getting married to opinions and being inflexible is ineffective behavior when it comes to short term strategies like swing trades. While Bitcoin may be in a wave 4, that does not mean we ignore buy signals, especially off of higher low supports within a broader bullish trend (see the two bullish pin bars off of the 46K area on my chart).
Here is what to look out for in the coming days: Lack of follow through. This can develop a number of ways. It can be a lower high around the 56K area, it could double top at 57K or go slightly higher and then fail.
Lack of follow through or a failed break out at this location presents very high risk for those thinking this is a good time to buy, especially for swing trades. Those in from much lower prices (like 48,500) have the luxury to let the market prove itself or not since the position is nicely profitable. If anything current prices are a place to reduce risk, not add more.
IF Bitcoin can clear the 57K resistance and close strong, then it is within reason to see a test of the mid to high 60K area over the following week. Our third profit target is within this area.
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