BTC has pulled off two times the exact same trick to fool people into thinking bearish!
That pattern is "designed" to make it look and get longs out and draw shorts in.
Then of course another big uptrend starts, fueled by people who buy in again and stops of shorts being hit!
In the chart I have shown how the structure works:
1. There is a nice big 1.leg up, clearly uptrend
2. Then several things happen, which make it look bearish:
- break of the uptrend line
- prices move below
- 2 legs down (red arrows)
- finally there is even a support broken after two legs down
3. Now a (big) candle marks the start of a new upward move, which then establishes a new 2. equal length leg up
Conclusion: If you see an "easy" short entry after a strong uptrend in Bitcoin , think twice and do not expect a big reversal right away.
These structures are often the start of the 2.leg and can be very profitable entries (green arrows), but they are "harder" to take because of the more scary signs.
What is happening right now?
Prices have reached the target of the last 2.leg at 11650. A little at 11550 was broken and we have a clear . It might look like super , but this often a point from which a correction starts. The first downside target would be the 11240 level, which is the breakout area. There is also a possible bigger range, which gives a target of 10800.
But this update is not about "I told you so", but about how important it is to think about where precisely the expected move could end. So you can take profits or even trade the bounce.
Also notice the structure I always talk about: Break of trendline and then two legs to new high or low.