(BTC) is getting closer to breaking the downtrend every passing day. Some would argue that we are already in the clear but Bitcoin has to close above the downtrend line and mark two consecutive green candles on the daily chart to confirm a bullish setup. While the big spike that resulted in liquidation of millions of dollars worth of BTC Short Positions was confidence inspiring, it is pertinent to note that the spike itself was mainly the consequence of shorts getting liquidated. However, we did continue to see some bullish sentiment as bears ran for their lives and bulls celebrated a victory.
While I do not believe we are in the clear yet, there is a more important argument of how it becomes easier to turn the markets
around as Bitcoin (BTC) gets lower. If you look at the yellow wedge on the chart, the lower the price falls, the shorter the range becomes for trading within the wedge. This means, eventually it has to break out at some point. However, it is important to note that in markets like these, the obvious seldom happens. So, you have to be on the lookout for opportunities. At the same time, it is important to maintain a level head and keep an eye on the price action without being carried away by emotions.
A rising wedge as visible on the 1H chart would set the ground for some imminent bearish action in the short term. It could happen over the weekend. 15th
of April is a very important day for Bitcoin. Either we will continue to recover from the downtrend towards new highs from next week or we could see further decline to even lower levels below $6000. In the current scenario, I think it is more likely that we will continue to resume bullish action after a minor correction this weekend. However, a possibility of fall below $6,000 cannot be ruled out, at least not yet. A good trader should always consider all possibilities and be prepared for all sorts of outcomes.
Another concern is the lack of short positions. While, longs are picking up, BTCUSD Shorts are nowhere to be seen. This is a clear sign of how scared retail investors are by the recent developments. It is true though that if you are not a market maker, you should refrain from taking such risky positions especially when the exchanges and big players can see your stop losses. Another critical sign here is that there is no rising volume of shorts, but make no mistake thinking that this is because BTC
is on the verge of a massive bull run. The reason is plain and simple. Retail investors are scared to enter short positions on Bitmex or Bitfinex after recent events. The whales on the other hand know exactly what they are doing. They are going to trap some more bulls in. Then they will enter short positions and dump their Bitcoin. This could result in a good buying opportunity if you are lucky to get in.