Bitcoin: Party Delayed? 2 Signs Of Vulnerability Now Present.

Bitcoin is nearing the 9K resistance while the crowd is celebrating a little too early for a 10K target. The average retail sentiment went from predominantly bearish (everyone calling for 4500) to bullish (everyone is calling for 10K or higher) in just a couple of weeks. Are you new to investing in Bitcoin? Perhaps you got sucked in from all the nonsensical hype that is so prevalent in this space. I would first like to welcome you to the madness of the crowds and second, provide a helpful suggestion: step aside. Buying now means you are buying at retail prices, which means the risk is very high while the profit potential is comparatively low. These are levels where smart money locks in profits while the crowd happily takes the inventory off their hands while assuming much greater risk. How do we know this? No, it wasn't on a news site, or on some other internet analyst blog, it is clearly unfolding on the chart.

Following price action has great value when it comes to short term market timing because it involves interpreting the "actions" of the crowd, NOT what they say or write. And at the moment price action has been unfolding in a way that says the crowd has bought, leaving price in a vulnerable position to retrace back toward the low 7Ks. Where is this visible on the chart?

There are two very prominent clues: Bitcoin, along with many of the alts are exhibiting 5 Wave impulse structures. In Elliott Wave, once 5 waves complete, the chances of a corrective move of the same magnitude increase. That does not mean price will correct in an instant, BUT probability favors a broader retrace now much more than it did just a week or two ago.

The second clue is the ascending wedge formation that has appeared during the attempt to push the 9K resistance. These price patterns are rare on larger time frames, and often appear during the 5th wave of an impulse. For us it is a huge red flag and cannot be ignored. That coupled with the fact that the majority of the internet analysts are bullish all point to a greater likelihood of a pullback, and not a move to 10K or beyond just yet.

Keep in mind, this is a general probability. Price may very well push to 9K or slightly higher before the broader correction unfolds. We don't make the mistake of "predicting" how Bitcoin will unfold over the next week or two, and instead observe and weigh probabilities. There is no guarantee that the ascending wedge will assert itself, BUT since it is there, we will respect it and adjust our strategies accordingly. Over a year we managed to navigate the Bitcoin bear market effectively and patiently adjusted our portfolio which went from a -60% at the low to +5% as of this writing. The majority will not be impressed with such a performance because it's not 600% return on a leveraged $100 account. I share this not to impress anyone, but instead to reveal a glimpse of "reality" which most are not accustomed to in this space.

In summary, Bitcoin and many of the alts have shown impressive moves over the recent two months and with it returns the circus of hype and nonsense that this market has become known for. When the untrained eye feels that it is "safe" to invest now, that is a clear warning that it is NOT. I am not bearish on Bitcoin, and I would certainly NOT short this market, BUT I will refrain from buying in areas where the crowd is jumping all in. Bitcoin may touch 9K or even 10K, but the risk of retrace is too high in my opinion. Our objective from here is to WAIT for a support level such as the low 7Ks or even lower before considering any new swing trade ideas or inventory purchases.