Bitcoin (BTC) bulls are already celebrating after the massive short squeeze that saw weeks of bearish positions liquidated in a matter of minutes! Even though retail bulls have suddenly appeared out of nowhere to claim victory and take credit for the recent spike in BTC/USD, the reality is that it had more to do with stubborn bearish positions being liquidated than genuine bullish interest returning back to the market. That being said, the recent spike that saw BTC/USD close above its 21 Day EMA has once again sparked a new wave of bullish euphoria in the market, but is it too early for the bulls to claim victory yet? If we look at the daily chart for BTC/USD, we can see that the price has just run into a strong trend line resistance and will now have to retrace a bit before it can continue up or down.
This retracement could lead to some interesting events. If we look just at the daily chart and take this symmetrical triangle into account, it is not hard to see that a lot of bears would find this the ideal point to enter further bearish entries. They would have reason to believe that the price is supposed to go down hard because it did not succeed in breaking above the trend line resistance. Even if we just anticipate a retracement to the 21 Day EMA within the symmetrical triangle, it would still be quite plausible to enter a bearish position at this point from a risk/reward standpoint. However, one of the dangers of technical analysis is that traders often forget that a chart can be interpreted in so many ways. Moreover, those interpretations show us possibilities not probabilities; you have to deduce the probabilities yourself.
Let us now look at another daily chart for BTC/USD from a different perspective.