Bitcoin: Bearish And Bullish?

Bitcoin has spiked back into the high 26K resistance. While this is a minor resistance, price can go EITHER way from here. So how to navigate the risk around this highly random situation? The first decision you must make is: are you conservative or aggressive? This will shape how you interpret the price action that COMES NEXT.

Having a rules based system helps immensely in these situations because it removes any indecision or emotional reactions. Whether you are conservative or aggressive will make it easier to take the trade once the criteria is met, or to avoid the setup altogether WHETHER the trade has a positive outcome or NOT.

This is precisely why I developed my trade scanner. It is a rules based trend following momentum reversal system. And it even tells me the stop loss and take profit levels. All I have to do is evaluate the context around the trade idea to see if it fits into a conservative or aggressive framework.

For example: the broader trend on Bitcoin is still BULLISH until the 25K support is compromised. This is CONTEXT. Price has presented a double bottom and has reversed in an area where such a probability was HIGHLY likely.

The trade scanner (tracking smaller time frame momentum) has been generating SHORT signals into a major support area

It is at this point where you must make a judgement: Are you conservative or aggressive? If you are conservative, you should NOT take short signals going into a major support. While it can work, the probability of a positive outcome is smaller.

If you are aggressive, you can consider these highly risky trades, KNOWING that probability is working against you. This requires heavy monitoring and being quick to exit the trade BEFORE the stop is reached if momentum is not following through. Aggressive trades should be taken on PAPER if you are a beginner.

As of now, the trade scanner has generated a number of short signals across alt coins like Litecoin, Polygon and a few others. Bitcoin is also in a position where IF 26,200 is taken out, and momentum follows through, a test of the 25K low MAY be tested AGAIN. While this is all well and good, we must NOT overlook the broader context: price still flirts with a major support. IF price takes out 26,850 area, a squeeze can potentially push into the 28K area. Which side do you choose? Are you conservative or aggressive?

Its NOT about accurately FORECASTING the future because markets are MOSTLY random. It is about considering a number of scenarios and ADJUSTING expectations and risk as price provides NEW information. If you're confused, stay out altogether. Protecting capital is the number one priority ESPECIALLY in this extremely conflicted economic environment.

Use this time to learn the reality of how markets work so that when the markets get better, you are prepared and confident.

Thank you for considering my analysis and perspective.