BTCUSD: Signs Of The Bottoming Process.

BTCUSD update: Weak prices but no new lows as this market tries to find stability within a multi degree overlapping support area. Often a market bottom is not a simple event, it is a process that unfolds over time. As long as the 6K recent low is not taken out, this market is building a broad base to rally from in my opinion.

Right now there is an inside bar in place within the 7980 to 7652 support zone (.618 of recent bullish swing). This zone is overlapping the 8171 to 7239 support zone (.618 of the recent bullish structure off the 6K low) and that is overlapping the 8174 to 4983 support zone (.618 of entire bullish structure since the 150 low). That is a lot of overlap. Now, all the overlap in the world does not guarantee that price will find a bottom here, but it certainly makes for a very strong technical argument for accumulating and holding your coins in this tough environment.

In addition to that, there are a series of extreme reversal zone boundaries that are based on recent lows which are 7776, 7401 and 6941 respectively. Any reversal candle off of these levels will be a buy signal according to my plan and criteria that I look for. So what does all this mean? As ugly as this market gets, remember where we are in the big picture. There is a greater chance that a broader bottom develops rather than dramatic new lows which all the hype and herd mentality traders point to.

One clue to watch for, especially for people who consume news, is when this market starts shrugging off negative news. Often that is a sign that buyers are absorbing what ever supply is left while no new selling is entering the market. There is NO precise way to measure this relative to the news, it is more of a general observation that helps to put this environment into perspective.

A bottom process is one where lows can be retested a number of times, resulting in a lot of false starts and lack of bullish follow through. Just like we are experiencing now. My swing trade was stopped out, but I am looking to get right back in. What needs to happen now in order for me to enter into a more conservative position is to wait for evidence that this bearish momentum is losing its grip. That level for me is a break of the 8230 level (.382 of recent bearish swing). There are a number of ways to play that break which I will explain further on S.C.

In summary, higher lows often lead to higher highs and represent underlying strength as expressed by the order flow on the larger time frames. A reversal from the current location which constitutes a higher low formation can lead prices back toward the mid to high 8Ks or higher. Do not lose sight of where this market is trading and get sucked into the herd which is calling for shorts. This is no different than when they were calling for 30K when this market was at 18K. The levels are laid out for you on this chart, it is up to you to determine where you are comfortable taking risk and how much risk. I intend to go long again, and I am going to wait for the confirmation which will cost me the most attractive prices, but what matters more is the market staying on my side in terms of momentum.

Questions and comments welcome.