Bitcoin failed to push higher and continue the rally from that Day 5 high near $7,780. Early in any Cycle you expect enough strength to be found where it can power through against the resistance of the dominant downtrend, which clearly Bitcoin remain in since the December highs.
I do not like the look of today's reversal in the least, we should not be seeing this type of early Cycle weakness. On the flip side, it's too early in the Cycle to realistically expect that Bitcoin will show us a Failed Cycle. Even in a bear market trend like this, we would expect bitcoin to rally for the first 10 to 20 trading days before a top is found. Below is my favored view for the next month of trading. Unfortunately, in both cases presented below I respect what the Cycles are showing, which clearly are a series of lower highs.
I was long Bitcoin from the $7,450 area coming into today, but my $7370 published stop was hit. One thing you will learn about my style is that I trade with Risk in mind first and foremost. I want to lose absolutely little to nothing on every trade and I am more than willing to miss a trade entry if the setup does not allow me to structure my trade with a tight stop and little risk.
Going forward, this is a difficult market we face. The dominant trend is lower, this is a fact and the reality we face ourselves in. We all want to be bullish Crypto-currency but the intermediate term trend tells us to be very cautious and not get married to any bullish or Long narrative at this time.
In the short-term though, I still see a new Cycle that is on Day 12, so I would not be surprised if this drop today is bought and that Bitcoin does not fall below its recent Cycle Low. Instead, a rally up to the Day 20 area is my best expectation for the top of this Cycle. Let me be clear though, a drop below the prior Cycle Low of $7,040 would be an extremely bearish development at this point which also opens the possibility for a massive fall over the coming 6 weeks. Below is the bearish Cycle alternative with a Day 5 Top, leaving 55 trading days lower to the next Cycle Lower. Remember, always respect the dominant trend.
Remember - If you do not have conviction in your trade and if the trade setup does not match your trading strategy, then don't take it. Focus on risk first, followed by the size of your trade, and knowing when the trade no longer works. Hope a market will turn to save your position is not a strategy.