Bitcoin rallied slightly during the trading session on Wednesday, as we continue to see a bit of support underneath. The $6000 level has been important more than once, as seen on the longer-term charts. What I am seeing is that we are losing volume going forward. It seems as if there is a general lack of interest in this market, so I think at this point we could probably bounce from here but it would be short-lived at best. We continue to make lower highs, which tells me that we are still very much in a downtrend. Unfortunately, there is very little in the way of volatility to trade, and it seems as if the market is simply being left in droves.
I suspect that one of the biggest issues right now is that the flood of “new money” coming into the market but at very high levels, perhaps somewhere near the $17,000 level, or even higher. Unfortunately, most retail traders won’t cut losses, they would rather just sit and wait. They assume that this is dead money now so they aren’t paying attention to it with the slim hope that someday they’ll get all of their money back. There is nothing on this chart that suggests that will happen at this point. However, I do recognize that there are a few distinct trading signals right now.
The case for buying bitcoin would be made if we can break above the downtrend line. At that point we would be looking at $7500, followed by $8250. If we can break above that level, then we would test the $10,000 level. Another scenario is that we rally from here and show signs of weakness between here and the trend line, a trade that has worked since January. The alternate scenario from those would be a break down below the $6000 level, and a fresh, new low. If that’s the case, this market breaks down towards the $5000 level.
