Bitcoin: Conflicting Signals 24K.

6 août 2022

Bitcoin price action has presented two sell signals within the 22 to 24K resistance zone in recent weeks but without any follow through to potential supports. Does this price action imply strength? Not within this context. Let me explain.

The long term trend (since the 69K peak) is still BEARISH. Not one key resistance level has been compromised. Everyone likes to over complicate things and constantly search for reasons and logic. As long as the main resistance levels are in place, Bitcoin is still more vulnerable to LOWER prices. "Why!?" does not matter. Respect the market, don't question price.

The key resistance level at the moment is the 22 to 24K AREA. Price has rejected this area multiple times which confirms weakness, but without follow through. While it can be argued that the short term trend is bullish (since the 17K low), when compared to the broader structure, this "bullish" trend can easily turn out to be a small retrace within a broader bearish trend. Do NOT lose sight of that, especially if you are operating on the swing trade or investing time frames.

So how to interpret the lack of follow through? This is a summer time lower activity environment. For those with little experience, markets have a tendency to be seasonal in some ways. The summer time months in the U.S. are typically associated with lower volume and less eventful markets. How does this affect Bitcoin? In case you haven't noticed, there is a relationship between the S&P and Bitcoin.

So until there is a dramatic enough catalyst or return back to normal activity (4th quarter), it is within reason to anticipate the ranges to hold. That means if a new sell signal develops in Bitcoin within the current resistance, expectations of follow through should be low (that means take profits sooner if you have the chance). Otherwise smaller time frame strategies make more sense here.

While it can be argued that a new buy signal is in the process of developing, it carries very little weight on this time frame. That means the risk is very high compared to the potential profit expectations. To keep it simple, if you are new to this game, avoid low probability setups.

Learn to trust and respect price. It factors in all the known information in the world. You can't beat an efficient market especially with conventional methods or "logic". Irrationality is one of the main factors that keep retail traders and investors from winning, while at the same time it is one of the few areas where opportunity exits for a retail trader/investor. Recognize charts for their expression of human behavior, because that is the factor that stays the same.

Thank you for considering my analysis and perspective. I hope you find it helpful.