Bitcoin markets break another barrier

Bitcoin markets have rallied yet again during the trading session on Wednesday, slicing through the $12,000 level. This is a major break out as it was an area of the market tested several times on the way down and could not break above. Now that we have completely turned back around we have essentially formed a very negative technical pattern, at least something that should be flashing warnings.

This isn’t necessarily to say that you should be shorting Bitcoin, rather you shouldn’t be buying it at this point. Markets don’t go in one direction forever as you probably learned a couple of years ago in this market. If you were here trading, Bitcoin traders started to believe that the market was going straight to $1 million, and the Chicago futures exchanges started to offer Bitcoin in those markets. That was literally the top. The day the futures markets opened was one or two days before the market collapsed.

Parabolic

The market has gone parabolic at this point, and that is not a very good sign to say the least. History does tend to at least rhyme, if not repeat itself. Ultimately, I believe that the market will offer plenty of buying opportunities underneath but right now it is very difficult to get into the market with a fresh position. Eventually, people will start to remember what happened two years ago and take profits. While institutions are starting to get involved in Bitcoin, when they yank their positions out of the market, it will cause a significant sell off.

That doesn’t mean that you should be shorting but what it does mean that unless you are a longer-term holder of this market, you should start to think about taking profit at this point. If you’ve been following my analysis, you may have about $4000 in profit per coin. That’s nothing to sneeze at, so by all means you have to start to think about perhaps reentering the market after a pullback. If you haven’t been involved in this market, then the second part of that sentence is your plan.

Trading plan going forward

Keep in mind that anything can happen. We could go parabolic for another three days for that matter, but at this point if you are not involved in this market you need to find value. I think value would be found at the $10,000 level eventually. In other words, you are going to need to be relatively patient to take advantage of a market that clearly has bullish intentions. Because of this, there’s no need to fight the tape. That’s a great way to lose money by the way.

As mentioned previously, buying Bitcoin at this point is simply asking for trouble. You need to be able to ride out a $2500 loss per coin at the very minimum. I also think we could go as low as $8000 before bouncing as well, but with the psychological importance of the $10,000 handle, I anticipate that’s about as low as we go. To the upside, the next major area is going to be $15,000.