A Few Observations on Bitcoin

I don’t often trade Bitcoin, but I do watch it closely as a way to measure risk and systemic liquidity. I have a couple of observations I would like to make here.

There are two important trend lines in play near us at present:

  1. The head and shoulders neckline (orange) that I’ve pointed out before (e.g., here), and
  2. The down trend line (green) also pointed out before (here)

Note that we remain below the head and shoulders neckline, but that we have broken above the down trend line. Now, if these two pieces of technical evidence were equal, I suppose we would have to say that there’s a tie (i.e., “We could go up or we could go down”), but I am not so sure that they are equal here. To begin with, we already broke down from the H&S neckline and retested it from beneath once before (see the retest there on 1/20), and what did that get us? Yes, it got us a selloff, but it came nowhere near to giving us the full measured move (which should have taken us well below $20K).

And so maybe this down trend line carries greater weight for us. If we’re retesting that from above now, then any acceleration up from here will also recapture the neckline and we will have a very bullish setup. And so, that’s what I’m watching. If this is a nest of ones and twos (blue and orange degree), then we may accelerate to the orange box, before wrapping up a series of fours and fives for the completion of a first impulsive structure off the 1/24 low.


And of course, we are also welcome to look at the structure as an inverse as well, like this:


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