Bitcoin did brake out of its spike and channel formation to the downside, after a short lived pullback at 9500.
This is not surprising, because prices traded down into the broader channel/range by making a first leg.
We often see breakouts in the same direction prices traded into a range, thereby continuing the trend.
The market then established a steep downtrend channel, moving with two smaller legs down to 9.000.
A quick pullback then took prices back up to 9500 again, thereby testing the former range again.
The pullback started at the end of the big second leg (blue) and the target from the smaller second leg (red).
How to enter in trend direction when you see such a strong pullback?
Wait for the steep uptrend to be broken and look for a new high afterwards!
Then the downtrend should continue and a new short entry may present itself, as it did in this case.
BTC failed to get back into the former range at 9500 and the bearish candle suggested a retest of the low at 9.000.
Why a retest of that support could be expected?
Because after a short term downtrend, like the second leg (blue), you expect a new low or at least a retest of the low at 9.000!
We did indeed get a new low at 8.800. This move can be seen as a first leg and a new short term trendline drawn.
After a short pullback to the downtrend line at 9.100 you could expect a equal length second leg, which had a target at 8.430.
The market pulled back hard 500 points exactly there!
Don't fight the trend, look for price action entries and targets!
This is not surprising, because prices traded down into the broader channel/range by making a first leg.
We often see breakouts in the same direction prices traded into a range, thereby continuing the trend.
The market then established a steep downtrend channel, moving with two smaller legs down to 9.000.
A quick pullback then took prices back up to 9500 again, thereby testing the former range again.
The pullback started at the end of the big second leg (blue) and the target from the smaller second leg (red).
How to enter in trend direction when you see such a strong pullback?
Wait for the steep uptrend to be broken and look for a new high afterwards!
Then the downtrend should continue and a new short entry may present itself, as it did in this case.
BTC failed to get back into the former range at 9500 and the bearish candle suggested a retest of the low at 9.000.
Why a retest of that support could be expected?
Because after a short term downtrend, like the second leg (blue), you expect a new low or at least a retest of the low at 9.000!
We did indeed get a new low at 8.800. This move can be seen as a first leg and a new short term trendline drawn.
After a short pullback to the downtrend line at 9.100 you could expect a equal length second leg, which had a target at 8.430.
The market pulled back hard 500 points exactly there!
Don't fight the trend, look for price action entries and targets!
