Bitcoin has been ranging close to a key level of resistance for a few weeks now. The longer it spends in this zone, the more it feels like decision time is coming soon. With that in mind, I’ve outlined both bullish and bearish scenarios that I am looking for and how I might look to play them.
Plotting out both scenarios runs the risk of driving a trader into paralysis through over-analysis as you struggle to pick a bias. For me personally, it helps a great deal to not have that as I can very easily slip into confirmation bias to pick whatever narrative suits what I think will happen. Rather than trying to predict which way the market will go, I prefer to let the market come to me in an ‘if X happens, then I will do Y’ manner. Surely enough, X doesn’t always happen, but by establishing these clear entry conditions, I’m far less likely to trade emotionally.
I would normally be watching these on the daily chart but for the purposes of this write-up, I’ve chosen the weekly view just to clean up some of the price action noise.
Image 1 – Bullish Scenario
Given we are in the third week of sitting in the current 12 hour range, it wouldn’t be surprising to see a sweep of the range lows before pushing up. What I want to see from the push up is strong displacement. Such a move will create a fair value gap. A retest of this zone, alongside it being a retest of the order block, will provide the conditions to look for an entry on a lower timeframe (area of interest marked in orange). The target for a long would be within the grey FVG zone marked out as this is a zone where I will want to re-evaluate what the price action is doing. Coincidentally, there is a CME gap within this FVG which adds confluence to this being an area of interest.
It is not impossible that a push through the weekly resistance moves too quickly to provide the retest entry that I am looking for given the lack of structure to the left. Will I care? Absolutely not. You won’t always get your entry conditions but the point of having them is so you don’t go chasing price action and inevitably make poor decisions.
Image 2 – Bearish Scenario
On the weekly chart, I have noted that in the two move recent moves up have both printed bearish divergences with the CCI. It is not uncommon to see a third drive in price printing a third drive of divergence as a sign of reversal. In this scenario, I would be looking for that third drive in price to sweep the high marked out in blue. This price level coincides with liquidation levels identified by our fellow Kreator, Garth, in his most recent analysis of Hyblock charts.
Similarly to the bullish scenario, if price pushes up, I will be watching closely to how it reacts. Whilst in the bullish scenario we are looking for acceptance above this level, in the bearish scenario, I’m looking for some form of swing fail. Sweep the high and reject.
If we get that, I will typically look for two entry scenarios that have been marked out with circles:
Orange Circle – Retest of the underside of the weekly range
Purple Circle – If I’m wanting more confirmation, I’d wait for a strong displacement move further down breaking the market structure marked with the purple ray. I would then drop down to a lower time-frame to look for entries on the recovery.
Both scenarios target the weekly range lows which further lines up with higher timeframe liquidation levels noted in the Hyblock chart analysis.
Conclusion
To be clear, I am in no way saying that price will definitely follow one of these two scenarios. The point of this exercise is primarily identifying that we are at a key level and then under what entry conditions I might take a trade depending on how price responds. The key is letting the market come to you rather than trying to chase trades. Will you always get your entries? Absolutely not. Does it matter? Hell no. There will always be more opportunities.
Introduction
Bitcoin has been ranging close to a key level of resistance for a few weeks now. The longer it spends in this zone, the more it feels like decision time is coming soon. With that in mind, I’ve outlined both bullish and bearish scenarios that I am looking for and how I might look to play them.
Plotting out both scenarios runs the risk of driving a trader into paralysis through over-analysis as you struggle to pick a bias. For me personally, it helps a great deal to not have that as I can very easily slip into confirmation bias to pick whatever narrative suits what I think will happen. Rather than trying to predict which way the market will go, I prefer to let the market come to me in an ‘if X happens, then I will do Y’ manner. Surely enough, X doesn’t always happen, but by establishing these clear entry conditions, I’m far less likely to trade emotionally.
I would normally be watching these on the daily chart but for the purposes of this write-up, I’ve chosen the weekly view just to clean up some of the price action noise.
Image 1 – Bullish Scenario
Given we are in the third week of sitting in the current 12 hour range, it wouldn’t be surprising to see a sweep of the range lows before pushing up. What I want to see from the push up is strong displacement. Such a move will create a fair value gap. A retest of this zone, alongside it being a retest of the order block, will provide the conditions to look for an entry on a lower timeframe (area of interest marked in orange). The target for a long would be within the grey FVG zone marked out as this is a zone where I will want to re-evaluate what the price action is doing. Coincidentally, there is a CME gap within this FVG which adds confluence to this being an area of interest.
It is not impossible that a push through the weekly resistance moves too quickly to provide the retest entry that I am looking for given the lack of structure to the left. Will I care? Absolutely not. You won’t always get your entry conditions but the point of having them is so you don’t go chasing price action and inevitably make poor decisions.
Image 2 – Bearish Scenario
On the weekly chart, I have noted that in the two move recent moves up have both printed bearish divergences with the CCI. It is not uncommon to see a third drive in price printing a third drive of divergence as a sign of reversal. In this scenario, I would be looking for that third drive in price to sweep the high marked out in blue. This price level coincides with liquidation levels identified by our fellow Kreator, Garth, in his most recent analysis of Hyblock charts.
Similarly to the bullish scenario, if price pushes up, I will be watching closely to how it reacts. Whilst in the bullish scenario we are looking for acceptance above this level, in the bearish scenario, I’m looking for some form of swing fail. Sweep the high and reject.
If we get that, I will typically look for two entry scenarios that have been marked out with circles:
Orange Circle – Retest of the underside of the weekly range
Purple Circle – If I’m wanting more confirmation, I’d wait for a strong displacement move further down breaking the market structure marked with the purple ray. I would then drop down to a lower time-frame to look for entries on the recovery.
Both scenarios target the weekly range lows which further lines up with higher timeframe liquidation levels noted in the Hyblock chart analysis.
Conclusion
To be clear, I am in no way saying that price will definitely follow one of these two scenarios. The point of this exercise is primarily identifying that we are at a key level and then under what entry conditions I might take a trade depending on how price responds. The key is letting the market come to you rather than trying to chase trades. Will you always get your entries? Absolutely not. Does it matter? Hell no. There will always be more opportunities.
Thanks for reading!