The Decision Point
The Market Tale (Oct 02, 2019)
“So Bitcoin is doing nothing today,” said Bull.
“Quite the opposite — the Bitcoin market is making an important decision,” responded Bear, who was rather concerned about his short position.
“It’s currently at support”, continued Bear, “which had been formed by the previous resistance.”
“What do you mean?”
“Do you see the green line at 8217.5?”
“Yes.”
“This price level has acted as resistance earlier, meaning that every rally above that level has been sold into. Here’s how it looked before the local breakdown:”
“OK, so the price is not going higher than 8217.5.”
“Exactly. Next, the local breakdown happened:”
“However, it didn’t push below 7736 (red line), so we got a recovery rally. The rally was strong enough to push the price above 8217.5:”
“The bullish momentum didn’t last long. After a swing failure at 8532, Bitcoin has retraced down to 8217.5 again. So now it’s making the decision: will that level hold? If it holds, and the price exceeds the recent high of 8309, we will see a higher low + higher high, which is the definition of uptrend. If that happens, the price will propel much higher, to 8800-9000 range.”
“So 8217.5 acted as resistance, now it flipped into support, and if it holds, we’ll see another rally?”
“Yes, that’s a good summary.”
“Alright, so let’s buy!”
“Hold on. Do you see a higher high already?”
“Well… not yet.”
“So wait.”
“… but that’s boring.”
“Good trading is boring.”
“Guess you’re right. I’ll wait for confirmation.”
Previous episode: The Pullback
Next episode: Getting Closer
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