Bitcoin Confirms Broader Consolidation Pattern?

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Updated: May 20, 2021, 13:23 UTC

About two months ago, Bitcoin was flirting with 65K and yesterday it actually touched 30K, a corrective move over 50%. Why were none of the experts calling for such a dramatic change back in February?

It just goes to show: No one knows anything (unless they are an insider in which case it is not in their best interest to share it). There are two points I want to make in this analysis: 1) listen to price not people, and 2) the 40K support break confirms a change in our long term outlook.

Was there anything in the charts that could have helped us determine that price was going to retrace so dramatically? NO, but there were plenty of clues that pointed to the price being highly vulnerable to a pull back, especially in the 65K area (watch my previous videos). Off of the 55K area, I was looking for a retrace to the 52K or 50K to 48K areas for a bullish reversal. Bitcoin reached our anticipated supprots, but it never confirmed. Having specific rules in place kept out OUT of a market that was in the process of pulling back about 20K more points.

This is why it is so important to listen to price and not people. How many experts were stepping in front of this move too early becasue they felt “how much lower can it go?”. Right now price is attempting to stabilize with the development of an inside candle. IF it can hold, and the high of the candle (around 41K) is taken out TOMORROW, that would qualify as a swing trade signal for a very aggressive long. Why aggressive? Because the mid term trend is no longer bullish, it is now range bound.

Which brings me to my second point: I have been talking about the potential of a broad Wave 4 corrective consolidation for months, but required a key support to be taken out in order to confirm. That level was 40K. This means we now adjust our profit and risk expectations to a market that will likely be in an erratic consolidation for the next 6 months or longer. (See spot Gold from August to March for an example of what Bitcoin may look like).

This means reasonable profit targets will be into the low 50Ks unless Bitcoin can prove otherwise. Keep in mind, IF the current bearish moment persists, it is well within reason to test the low 30Ks again since a range bound market often tests its boundaries multiple times. The idea is to let the market show its hand and then adjust, not try to force your hand on the market.

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