Bitcoin Hits $10,000 - Now What? BTC hasn’t broken key $10,550

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Bitcoin Hits $10,000 - Now What? BTC hasn’t broken key $10,550

BTC hasn’t broken key $10,550 resistance

The price of Bitcoin exploded overnight, close to about $10,107. All the Twitter and YouTube trolls are surely preparing to roast me, so I’ll start this write-up with proof of loss in my swing short in Bitcoin (sorry, TradingView audience, we can't share those images here as per the House Rules).

Folks who were present for the live session the other evening saw this explosive move, proving Bitcoin’s the only rocket that will never be canceled due to bad weather. Around now, there are plenty of people shouting that we’ll never see sub-10,000 again, but I’ll show you another point of view.

Bitcoin bulls have a lot more to prove than the bears as the price challenges a key area that’s been rejected for about nine months. Bitcoin broke out on a convincing level of volume , but now we need to see follow-through.

When BTC breaks above 10,500, I’ll be more inclined to turn my sentiment bullish . But let’s review what a strong breakout looks like. In November 2019 through January this year, BTC broke out to 10,550 from the 6,000’s. The volume when the price reaches past the key resistance point marked on the chart as 7682 shows a steady increase, and even as sellers heavily weighed into the move, the price continued to climb in a convincing manner.

How to trade this Bitcoin action

My trading strategy would be to look for a retest of the top of the triangle as per the chart, proving there’s enough support for continuation upward. That retest opportunity would appear around 9850 to 9900. I’d buy that retrace for a bounce towards 10,450. The next play would come if price flirts with 10,550 on convincing volume . There isn’t much beyond there to stop Bitcoin from reaching 12,500 or 13,900, which is a key high.

Alternatively, if BTC starts rolling over and breaks back inside the triangle, I’d become suspicious that this is shaping up to be one big fakeout. Keep in mind that buying anywhere before a retest of the top of the triangle or a convincing breakout of the key high around 10,550 would be buying into resistance, and that’s something I rarely do unless all my ducks are in a row in terms of volume , market sentiment, and the strength of nearby key levels.

One interesting detail to note is on the derivatives side (via Exocharts), it is clear that a great deal of the move from yesterday was thanks to a short squeeze from liquidations, resulting in a $1.21 billion candle with a net positive delta of only $130 million. Real money wasn’t entering the market and boosting up the price, rather this was a cascade of short positions closing or being liquidated. To accompany that, looking at a spot exchange like Bitstamp or Coinbase shows that new volume entering the overall market was fairly low; the majority of this move was an exchange of already-leveraged positions from one set of hands to the other.

To summarize, I see two reasons why BTC’s breakout may have happened:

Either this is a trap, or it’s a true breakout for continuation to higher highs. You don't break out like that and just meander around, so if there is no continuation and the price does fall back inside the triangle, that would imply that the bulls may be running low on fuel. However, a retest of the top of the triangle with a continuation on the bounce would be a strong sign for the bulls. See today’s video around the seven-minute mark for a breakdown on how to use smaller time frames alongside alerts to catch a breakout above the 10,550 area.

Thoughts on the markets beyond crypto

Yesterday I picked up a position in silver ( SLV ETF ), as I think metals are doing pretty well. Let’s discuss what non-crypto markets are doing.

The S&P 500 ( ES1! ) futures contracts are taking off in the middle of widespread social unrest with 40 million people unemployed in the US, proving to even the most rational traders that the equities market doesn't care about Main Street. The Fed is deliberately blowing one of the biggest economic bubbles on record. This is a bit of dark humor, but Macy's flagship store was looted, and yet the company’s stock went up. Talk about having good insurance!

Meanwhile, put-to-call ratios are between 0.50 and 0.51, which to me implies larger players are gearing up for something like a top in the market or a meaningful distribution of money from one area of the market to another. The implications of that are vague and far-reaching, but we’ll keep our viewers informed as to how we position ourselves in the coming days.

Hedge funds’ exposure to equities remains near historic lows, despite the market surging 37% over the past two months. Hedge fund managers are distancing themselves from that risk.


Information provided by Alpha Trades, LLC is not intended to be utilized in making any financial decisions and is not a solicitation, nor recommendation to buy, hold, and/or sell a particular product, digital asset, or ICO .



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