I wanted to cross-post some ideas from some other threads. First, some commentary on Bitfinex commitment of traders and trapped bears:
The way we ripped through the $8,800 range high and haven't returned below again trapped a massive amount of bears. They are the fuel for the next move up.
And here are some thoughts on short term expectations:
Look at what happened to shorts (at the bottom, in red):
We can see that shorts increased by ~30% in the $7,000s and peaked at the bottom on October 24th. Then they were squeezed and short levels bottomed out on October 26th when price hit $10,500.
Also, consider all the price action in the red box. From September 24th to October 25th, the market ranged below $8,800. Considering that price is now in the $9,300s, all sellers/shorters in that range who didn't buy back lower are now sitting in loss.
We can also be fairly sure the vast majority of traders did not buy back lower. Why? Sentiment was deathly bearish in the $7,000s. Everyone expected at least $7K; most people expected $5K-$6K if not $3K. In hindsight, we can now see this was extreme bottom selling sentiment. Bears weren't buying back in the $7,000s and this is confirmed by looking at short levels.
We can see that shorts increased by ~30% in the $7,000s and peaked at the bottom on October 24th. Then they were squeezed and short levels bottomed out on October 26th when price hit $10,500.
Also, consider all the price action in the red box. From September 24th to October 25th, the market ranged below $8,800. Considering that price is now in the $9,300s, all sellers/shorters in that range who didn't buy back lower are now sitting in loss.
We can also be fairly sure the vast majority of traders did not buy back lower. Why? Sentiment was deathly bearish in the $7,000s. Everyone expected at least $7K; most people expected $5K-$6K if not $3K. In hindsight, we can now see this was extreme bottom selling sentiment. Bears weren't buying back in the $7,000s and this is confirmed by looking at short levels.
The way we ripped through the $8,800 range high and haven't returned below again trapped a massive amount of bears. They are the fuel for the next move up.
And here are some thoughts on short term expectations:
The only thing I see here is a bull flag of sorts. Clear flag pole and sideways pullback above the 50% level:
A typical pullback would be to the 50%-61.8% range, the green box. However the pullback has been shallow and drawn out, suggesting this may be more of a sideways "time" correction than a "price" correction. I'm not sure we'll make it there.
Look to the left to see examples of failed short squeezes, and how quickly the gains were lost. It's quite a contrast to the current chart.
A typical pullback would be to the 50%-61.8% range, the green box. However the pullback has been shallow and drawn out, suggesting this may be more of a sideways "time" correction than a "price" correction. I'm not sure we'll make it there.
Look to the left to see examples of failed short squeezes, and how quickly the gains were lost. It's quite a contrast to the current chart.