BTCUSD: Test Of Low In Sight But Bears Beware.

BTCUSD update: Lower high increases the possibility of the failed low attempt around the 9683 level. To break this bearish bias, price needs to push above the 12346 minor resistance zone.

Even though a higher low formation has been established above the 9989 area, that does not guarantee we will get the new rally back to 15K or 16K. It increases the chances UNLESS the market changes which we have no control over. As a price action trader I do not fight or insist or assert my ego, I simply adjust.

The current bearish pin bar that is forming indicates such a change and points to the possibility of the bearish momentum leading this market toward retesting the lows once again. In order for this scenario to follow through, the bearish pin bar needs to close in the current configuration and the next candle needs to break the current candle low and close weak as well. IF this sequence occurs, then the retest of the lows becomes much more likely.

What is the failed low formation? As I wrote in my previous report, the failed low is when price goes slightly lower (often into a reversal zone) and then proceeds to reverse dramatically. Often a pin bar will appear in these type of situations. Failed lows look extremely bearish at the bottom and are usually accompanied by a lot of hype, drama and bearish news.

Trading failed lows often provides very attractive reward/risk since the best prices become available. The key to watch for is the reversal candle formation within the reversal zone which in this case can be between the 9683 area and the 8656 boundary. IF the reversal candle never appears (and closes) then that is a sign to steer clear because it will indicate bearish momentum is taking prices to much lower levels.

I am still long from an average price of about the mid 12Ks and do not intend to exit. I write about the bearish possibilities because they are important to be aware of for risk management purposes but if the reversal candle that I am anticipating appears, I will simply buy more. What makes me so bullish in such a situation is the key support area and repetitive buying patterns.

I am evaluating and positioning myself for a broader rally that may take days or weeks to unfold in this market. It is just a matter of a bullish catalyst taking the market by surprise that will spark such a move.

In summary, being able to anticipate what the market is likely to do next provides a way to constantly adjust risk and expectations. Bullish momentum came into the market, but has stalled for whatever reason but do not lose sight of the bigger picture. Lower highs often lead to lower lows BUT there is no guarantee that this market will push lows here especially in light of being within a relevant support zone. Any minor higher low or immediate reversal off of a lower low (failed low formation) and I am looking to add to my position trade long. IF price breaks below dramatically, then I just sit on my position and wait for renewed signs of stability and evaluate from there. IF instead price never pulls back and pushes through the minor resistance, then we are back in the bullish momentum scenario. Trading and investing effectively starts with a plan, and that plan begins with an evaluation process that considers multiple scenarios. Either the market confirms or it doesn't and based on your risk tolerance you should know ahead of time what action you are going to take. Not reaction.

Questions and comments welcome.