Bitcoin has broken a three-month-long term downtrend that consisted of lower highs and lower lows.
Finally, momentum has shifted after an explosive move smashed resistance and took Bitcoin (at the time of publication) to just shy of $43,000.
Does that mean we’re in a raging bull market? Of course not. But it’s the first sign of a directional shift we’ve had in three months. And it presents us with some key levels we have to pay attention to.
The first thing we want to see is whether Bitcoin can reclaim the $44,500 level and print the first higher high in months.
If we can claim a higher high, then a retracement to back to $40,000 would signify a healthy pullback – a higher low. Again, it would be the first one since November 2021. That’s when we’d capitalize: it would mean a confirmation buy.
But what if we don’t claim the higher high? Should Bitcoin fail to reach $44,500, then a deeper retest is on the cards, and we could easily come down to test the $36,000-$38,000 region.
Is now the time to buy? We haven’t gotten our signal just yet. Wait. Be patient. If we claim the higher high and retrace back to the $40,000 region, that’s something you won’t want to miss, and would give us the confidence to add more aggressively to our positions.
Failing that, Bitcoin could go on to range sideways in the $36,000 to $41,500 region. In that case, Sheldon recommends using the Stochastic Relative Strength Index to Dollar Cost Average (DCA) into positions. Only with a higher-high (and healthy retest) can we begin to think about a more bullish buying strategy!