11,600 to 12,300 continues to hold Bitcoin back
11,600 to 12,300 continues to hold Bitcoin back, BUT at the same time, price has YET to take out any significant support levels. The 11K area continues to hold, and IF compromised, we are then looking at the 10,500 area for the next buying opportunity. It is important to not lose sight of the broader structure which is CLEARLY bullish. In situations like this, smaller magnitude reversal patterns such as the head and shoulder formation carry much less weight.
Also when there is significant selling off of a resistance level, often there is follow through. Meaning. after the initial bearish candle, the following candle often takes out the low and keeps going. At the moment price continues to hesitate ABOVE the 11K support which is a sign that the selling activity is nothing more than noise.
If price reverses again in the low 11Ks, it is more likely to squeeze higher, faster because of all the new shorts that pile in, while over reacting to a single bearish candle that is in the midst of a broader bullish trend. Confirmation of this would unfold when the 12K lower high is taken out. Squeeze momentum can quickly push the 12,300 resistance boundary.
If we are wrong
If we are wrong, and selling momentum increases over the next day or two, then we get stopped out. We measured our risk in advance and once the trade is in play, it is up to the market to do it’s job, or not. The key take away here is do not be confused by a small magnitude pattern when the broader trend is still intact. If price sets up at the next support, we simply look to buy back in again.
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This article was written by Marc Principato CMT, Executive Director at Greenbridgeinvesting.com.