“Shakeout” has been the definitive word for the last couple of weeks as markets have tested everyone’s resolve, especially those who have recently entered crypto. Is this going to continue? Are we going to see a continuation of this sideways correction with more scary selling? It’s one possibility, of course.
On the other hand, we could just as well explode higher if the lower channel boundary seen on the chart below holds. Without a doubt, that would be the most desired of possible scenarios. Market structure is also pointing to that eventuality, with the whole setup pointing to much higher prices.
In short, it looks to me like we’re at a crossroads, and quickly running out of room on the right hand side of the chart to further correct within the uptrend. Either we break higher, or we get more of the same, or worse, perhaps with things getting even scarier.
And if we break lower, you could just sell the break and buy back later, or could you?
Too bad things are never that straightforward though as sometimes we get a nasty head fake in the opposite direction before continuing the trend. A bear trap is the worst possible scenario since you get shaken out right before the market rockets higher. Maybe we already saw one last Thursday, but it’s a good idea to be aware of the possibility anyway – there’s nothing that says it can’t happen again, and this is where they are prone to happen.
Being aware of the possibilities, and mentally prepared to withstand the pain of a break lower that has a high probability of reversing higher again is extremely important in order to avoid getting turned upside down and losing money.
Since the longer term time frames are still very bullish – as are the underlying macro fundamentals – my strategy is going to be to simply hold (and thereby avoid getting whipsawed) and wait for more data before making any critical decisions.
What’s yours?
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