Bitcoin was in the process of breaking to a new high when I wrote last week’s analysis. That turned out to be the most exciting price action as not a lot happened over the next seven days. Today has started off a down day about -2% and price is sitting at $64k after several days of pulling back from the run up to a new all time high where it topped out at $69,000 on Coinbase.
While the break to new all time highs is certainly bullish and the uptrend is still intact, I’m seeing signs of weakness in both price action and technical indicators. First off, the run up to new highs was not on strong volume which would’ve been nice to see. Instead price did make a new high for 3 days in a row but really only closed at a new all time high on the first day. Volume was weak and the bulls couldn’t break price out with any real momentum. Other signs of weakness I’m seeing in technical indicators:
- Confirmed bearish OBV divergence
- Confirmed MACD bearish divergence
- Potential RSI bearish divergence
To me these signals of weakness are telling me to exercise patience and wait for a new long setup to come in and at the moment I’m not seeing it. The break to a new high did widen the range, but the reality is a new strong uptrend has yet to be established and we are still range bound between the $69k high and the October low of $57,653. Price is still quite choppy and sitting a little above the middle of the range and not in a very good trade location.
It’s not a question for me about whether the top is in, but more a question of whether this is a place to consider new longs. Unfortunately that answer is currently no. Price action is still in the process of cleaning itself up from the last run and I will need to see either bullish consolidation above $69k or a pullback to the bottom of the range and new bullish market structure before I can establish a new position. I also think it’s highly risky to short and will not be considering that until I see a major breakdown and a loss of the current range. Many traders will be run over trying to fade this super bullish market and I’m not planning on being one of them. Eventually this consolidation will resolve and at that time my next move will be apparent. Until then it’s my job to follow my plan and not get sucked into acting on my emotions.
As always, happy trading!!
