• Henk ter Linde

Do or Die?

Last week I predicted that we would probably see a sharp correction to the downside and I was wrong. Clearly. At that time we were getting rejected by the top of a Trading Range (at 7300) and no sooner had I pressed 'publish' or BTC showed some aggressive price movement to the upside. We even managed to challenge the 7800 resistance level. And that is where we more or less still are today.

Now this is a very interesting level. As you can see the 12hr Stochastic is more or less as high as it was just before the big break down (but also before some smaller breaks to the downside) and I seldom - if ever - see a break upwards with the 12hr Stochastic at these levels. However, this is BTC and it never fails to surprise.

So let's zoom out a bit and look at the daily, shall we?

As you can see, here we are fighting the 200 EMA as well as a long term S/R level. The Stochastic is on the high side here as well. You can argue a rising wedge, but it is far from perfect. It would however fit a break down to a level lower than the recent 3700-ish break though. Would that make sense?

For that, let's zoom out some more and look at the weekly.

On the weekly I used the 21 and 200 MA (so not EMA) as guides. The good news is that you can clearly see that the 200 MA is still holding strong. In 2015 we saw it challenged 3 times before we started climbing and in 2018 it was challenged 2 times. Maybe it would make sense if we only challenge it once this time, but somehow I feel another test is more likely. As you can also see, we are still below the 21 MA here. Another hill to climb. Surely there must be better news? Well, let us zoom out once more. How about the monthly?

The trend line support has clearly been broken and I see this month's positive candle as a bearish retest. It might even climb further north in anticipation of the 'halving', but I think that narrative will take a backseat to the current economic climate.

So, all in all I am bearish for the short/medium term. I will happily be proven wrong (like I was the past week) but I probably won't be entering any long term bullish, leveraged positions here. Long term, I think a deeper correction for BTC is a good thing. This also comes from a belief that the legacy markets are seeing nothing more than a relief bounce at the moment. If that turns out to be false and they are in fact recovering, my entire line of reasoning goes down the toilet.

For clarification: I am not bearish on BTC (or crypto) per se, just don't see it exploding during the current climate. Long term, it still might be a risky but rewarding investment. Short term, it is the most interesting to trade (together with ETH, LTC, LINK, etc) as you can make a very good living day trading the high fluctuations. However, always make sure you 'bet' wisely. Not more than you can afford to lose, do not over-leverage and don't be afraid to take a loss when you're wrong. Which I was. So I did.

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