Bitcoin (BTC) recently made an attempt to retest the previous low but it has yet to reach all the way down. The price has settled slightly above the previous low and is expected to consolidate there before the upcoming break out. It is pertinent to note that this triangle could break either way but considering that we have had an extensive correction and there is a bullish divergence on the RSI, the probability of a bullish breakout is higher. The 4H chart for BTC/USD shows that the price has been trading in a series of triangles throughout its fall. Just before the 25th November fall, Bitcoin (BTC) was trading in a triangle that it broke below to enter an even larger triangle. There is every possibility that the same could happen again short term.
Over the past few days, we have seen some bullish volume return back to the market but it is still insignificant compared to the bearish pressure. The whales have so far allowed bearish momentum to build up, but at turning points like these, they are likely to ultimately use that to their advantage. Just like the manipulation before the big fall that everyone chalked up to Tether rumors, we are likely to see a similar situation here, one that may trap in bears instead of bulls this time. The most likely scenario will be a quick break below the triangle which will hit some stops on Longs and also get new Shorts onboard. Then when the bears become too confident, the whales will pump the price up to hit their stop losses. This way the price will make a quick recovery that most will chalk up to buying interest returning to the market.
The current situation in the market is that the bears have become too confident. The past few days have made them believe that they are pretty smart and can time the markets. Just as it was not surprising to see people making calls for $100,000 and higher around $18,000, it is not surprising to see people making calls for $1,000 from here. However, the fact of the matter is that the people who made such ridiculous calls did not do very well then and they are not going to do very well now. If we look at the weekly chart for BTC/USD, we can see that there is still some hope as the weekly candle for last week closed above the four years long trend line despite breaking below it.
Most retail bulls have a problem and that problem is weak hands. They get out when they should hold on to their coins and stay in the market. If they can get back in without paying more to buy, it is a good decision but most of the time that is not the case. On the other hand, retail bears who consider themselves smarter than the bulls also have an emotional problem and that problem is overconfidence. Most of them feel too confident when they see weak bulls running away. Little do they realize that amid all the weak bulls fleeing away and the strong bears rushing in, there are greedy whales waiting to kill whatever comes their way.