It was an eventful weekend but it looks like we’re now safely back in the range. Things started to get a little hairy on Friday when Bitcoin immediately broke through the range low on the open, but the lows from late September provided the demand BTC needed for a bounce. Now that BTC has, at the moment, a daily close above the local high from the weekend, I think we are safe to long here with stops at the range low. Target is the range EQ at $47,200.
I don’t think we are primed for a run to ATH yet, though. While the range EQ (noted by the red “X” above) is the like next target, the price action over the last month is highly reminiscent of how the May selloff played out.
The recovery from the May sell off was characterized by a two month long range and two distinct tests of the low established by the liquidation cascade on May 19. This “three tap” pattern takes time to play out, but often leads to extended runs in the opposite direction. This pattern is actually quite common in the crypto markets, and especially with BTC, so I’m expecting one more distinct test of the range low around $42,375. At that point, it’s a high percentage play to get aggressively long, with an initial target of the range high, but continuation higher likely as well. (For more on this three tap pattern, please go have a look through @RektProof.’s account on Twitter.)
Taking a broader view, BTC is almost back to unchanged since the beginning of Friday’s session, at one point reaching 8% below the Jan 7 opening. The rest of the primary L1’s are still lagging, however, with Fantom the high beta play and still 12% below Friday’s open. Not only did BTC sell off the least, it is leading the pack back.