Bitcoin - Week 6 in Price Discovery
Understanding risk:reward at these highs
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Bitcoin's Short-Term Ranges
Last week, we spoke about how BTC was performed a post-breakout retest of its Lower High resistance into new support:
That retest lasted quite a few days and saw lots of downside volatility occur below it, but ultimately the retest was successful and enabled a Bitcoin breakout to $100k+:
Bitcoin has since enjoyed a historic Daily Candle Close above $1o0k and by the same token, its first ever Weekly Close above $100k as well.
However, right now BTC is pulling back and here's what that situation looks like:
Bitcoin Daily Closed above the $100k resistance and this current pullback is technically a retest.
However, this is of course a volatile retest, but price action is also dropping into the red region as well.
The red boxed region represents the final major Daily resistance, which BTC had successfully retested as support over the past two days.
As a result, because the red region and the $100k level are in close proximity to once another, BTC may be trying to retest both of these levels as support today.
A volatile retest like this makes sense, especially on the Weekly:
Because BTC's current pullback means that price is trying to turn the previous Weekly resistance of ~$98000 (black) into new support this week.
After all, this recent Weekly Close above black means that it has been broken as resistance and this week is all about trying to reclaim this level as new support.
However, it is important to emphasise that Bitcoin is slowly entering a timeframe during its Parabolic Upside phase where prices have retraced significantly.
And one of the ways to kickstart a correction is for price to, for example, fail a retest and lose a key level on a retest attempt.
As a result, over the next 3 weeks or so, I am going to be increasingly cautious about retest attempt and given BTC's history at this point in the cycle, I wouldn't be surprised to see key levels get invalidated.
Next Couple of Weeks Could Be Problematic
We are officially in Week 6 of Bitcoin's first Price Discovery Uptrend.
There's no question Bitcoin has effectively only just begun its Parabolic Upside phase of the cycle.
However, every Parabolic Upside phase features Price Discovery Uptrends as well as Price Discovery Corrections.
And historically, it is between Weeks 6 and 8 where BTC tends to pullback quite deeply.
And Week 6 has only just begun.