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Bitcoin Weekly Report 3/12: Trapped Bulls June 2021
I don't understand why Bulls are trapped in 2021 June low. How were the bulls trapped and why could they not get out when the market revisted that price in May 2022?
- "Bull case: They know that the chances of a bull major trend reversal are low meanwhile there are trapped bulls at the June 2021 low (they will add a lot of selling pressure limiting the upside); Therefore, what they desire is another bull leg starting here and get a leg 1—leg 2 measured move, up to the major lower high or, at least, up to June 2021 low.
Dear Elijah, thank you very much for your question. It will be a pleasure to try to clarify my point on this important detail.
Context: I believe that bulls bought 1 tick below the low of June 2021 low (contemplating it on a weekly Chart of Bitcoin CME Futures)
Let me begin by saying that it is just a guess. I think that there are trapped bulls, specifically there because that was the low of a Trading Range that came after a Strong Bull Trend; thus, the probability of a bear trend was low and bulls who thought that was a good idea, I think they were right.
Now, why I believe there are bulls there today?
1. On May 2022, the price visited for the first time, 1 tick below the June 2021 low: never revisited.
2. They could take some profits, of course, since the price went up to around $3500 from their buying point. But I think that their target was higher, at a minimum $5000. But more likely, their target was $10000 higher, around $39000. That is the number that also appears if we split the trading range into 4 equal parts, 100% being the all-time high and 0% being the June low, a good target was at 25% of the range around 39K.
Now, my question is: Are bulls still there? Some (or many), might have scaled in around the prior all-time high (at around $20000) and exited breakeven between $24000 and $25000.
I think that we will visit the June 2021 low at some point, and we will see if there is any kind of reaction as I am suggestion, or if there is not. I believe we will test it because the 20-month EMA is around there, the $30000 round number looks paramount important on the chart, and the 50% retracement of the 2nd bear leg (again, weekly chart) is right above $30000.
Thank you for the clarification, it helped me understand your blog post much better. Do you do Bitcoin trading classes or daily analysis? I just moved to Barcelona and am struggling to find a local community to discuss and learn from in regards to Bitcoin specific trading.
You are very welcome, I am glad you found this clarifying.
I do not do Bitcoin classes, neither daily analysis (maybe I do daily analysis in the future).
Bitcoin-specific trading it is not ready yet, at least, decentralized (as far as I know). Many altcoins tried to emulate the marketplace, but I think that the only decentralized way (warning, this is a polemical statement) is when this marketplace is built up on the Bitcoin network. To work well, it will need time, as it took time for a lightning network, for example. Nowadays, after the recent "crypto" bubble exploded, we can say that Bitcoin holding above 20k means that it is probably viewed as a consolidated asset, according to institutions; Hence, in time, Bitcoin-specific trading will be a reality.
For now, I would recommend you to trade the micro Bitcoin CME futures, hourly or higher timeframes, not for day trading (too much slippage). Look fore entries at 10AM candlestick or the Follow through 11AM, or the same after US open 4PM and 5PM. As far as I know, there aren't exchanges offering low commissions for day-trade their synthetic bitcoin products. Maybe there is a CFD broker that offers low commissions and tight spreads for Bitcoin, but if institutions are not trading a 5-minute chart because of lack of liquidity, why we should trust 5-minute patterns?
Most of what I have said are just thoughts, I am certain that there are people out there that surely can give you better answers.
Lastly, but more important, all you need to know to learn how to trade Bitcoin or any other asset, is in here, in the Brooks Trading Course. And also the Trading Room. You do not need external sources to have higher probabilities to success in this trading journey.