BTCUSD: Failed Low Plus Key Support Spells Short Squeeze.

15 sie 2018

BTCUSD: Price breaks the 6K psychological support only to close back above. This type of price action spells one thing: squeeze. The failed low formation off of this major support is a telling sign especially in an environment where sentiment is heavily bearish.

Many do not realize that while the alts were selling off, this market refused to push the 5750 low. If weakness was dominant in this market, price should have closed below 6K at minimum.

There is still bearish structure in place like the trend line just under 6300 and the 6879 level which is the .382 resistance relative to the 8500 high. A break and close above the trend line and push through 6500 can lead price into the high 6Ks in a matter of hours.

The fact that the short interest is at extreme levels is also another telling sign. The crowd is often wrong at tops and bottoms and this is certainly not the top. At S.C., we have been writing about the probability of a bullish reversal around this location since June.

The fact that price has returned to the location and is still proving to hold, reaffirms our analysis. Plus the reward/risk of the immediate structure is very hard to ignore. This is why at S.C., we sent out a swing trade idea to our members.

In summary, when everyone is betting on the short because it is the obvious trade, that is the wrong trade to take. The pressure from the short interest alone makes the reward/risk very unattractive on the short side. What is going to drive the price the fastest are all the margin liquidations that go off in the mid 6Ks.

Can this market still go lower? Sure, anything is possible. A close in the 5900's or lower will certainly negate the current strength building up in this market. Until it provides evidence of continued weakness, we will remain long.

BTC has proven its resilience in the face of extreme selling. The fact that many of the alts broke below major supports while this market has not is a clear sign of strength.

At S.C., we do not short these markets for a variety of reasons. When the severe squeeze liquidates a large portion of the short interest, many of the less experienced participants may then realize why. Best practices prevent us from selling into an area where the risk can't justify the limited reward potential. The only shorts you will see us in are the wearable ones.