Bitcoin (BTC) Bullish Setup Remains Intact Despite The Devastating Crash

Bitcoin (BTC) bullish setup remains intact for now despite the recent crash. The price remains on top of an important trend line and a key support zone. It is close to testing the 61.8% fib extension level at $7,279 which would be a good time to look for bullish entries short term. We can expect a retest of the trend line resistance to say the least before the price declines below the 61.8%. In my opinion, it is going to be a long process before the price declines further. We have seen in the past that declines below such important support levels are never that straightforward because if it happened that way then a lot of retail bears would be profiting off those moves and a lot of people would be out of business if they let that happen. 

The daily chart for BTC/USD shows that the price has yet to test the previously broken market structure. We saw it happen the last time when the price not only tested the previously broken support turned resistance but cut through it like knife through butter to inflict some serious pain on the bears before a major downtrend. The same could happen this time even though if the price does not end up breaking past it and faces a rejection. It is very unreasonable to expect the price to keep declining from current levels without seeing further upside. It has to be the kind of upside that would shake out the bears because this decline that we are going to see next is going to be very significant. There are a lot of bears waiting for $6,000 and a lot of bulls waiting for $6,000 to buy. The most probable scenario is that Bitcoin (BTC) will first trap the bears and shake them out and then finally begin to inflict pain on the bulls.

The daily chart for BTCUSDShorts shows a retest of the 38.2% fib retracement level. We can also spot a downtrend on the RSI. This is the daily time frame and therefore more significant. There are two explanations for why BTCUSDShorts could fall from current levels. The first would be a liquidation of shorts as a result of big pumps to the upside following the recent crash. The second would be traders claiming their leveraged shorts on exchanges like Bitfinex.

In both cases, this would be bullish for the market short term and we would see a series of pumps to the upside similar to what we saw after December, 2018. I don’t think they will be a result of real buying interest. I think it will be the same kind of manipulation as we saw last time but that is what the whales and market makers will do again because there is no way they are going to ride the price down to $6,000 this easy. When the big downtrend is about to begin, a lot of traders would have serious doubts if that could really happen. So far, that is not the case because even the bulls are scared and expecting the price to fall further. We will see more “Bitcoin to the moon” calls before the price begins its decline towards $6,000 and lower levels eventually.