![\"chart\"](\"https:\/\/image.exct.jeffclarktrader.com\/lib\/fe9513737560047476\/m\/1\/b9eb57c9-338a-4d05-b98b-7c81ad6a0fc6.jpg\")
<\/a><\/p>\nBitcoin surged higher following President Trump’s election. The King of Cryptocurrencies rallied 50% in a month. And, that move created overbought conditions on the MACD and RSI momentum indicators (at the bottom of the chart). It also caused the various moving averages to expand far away from each other.<\/p>\n
For the past two months, though, Bitcoin has been stuck in a wide, consolidation range between $92,000 and $106,000.<\/p>\n
This consolidation phase has relieved the overbought conditions. It has allowed the moving averages to coil together, building energy to fuel the next move. And, since the height of the consolidation pattern is $14,000, the next move is going to be BIG.<\/p>\n
If Bitcoin breaks out to the upside, then it could rally to $120,000. On the other hand, a breakdown below $92,000 could target $76,000 – which would wipe out all of the gains since Election Day.<\/p>\n
Crypto bulls will argue the “high-level consolidation” after such an explosive run higher is bullish action. And, since the various moving averages have morphed into a bullish formation – with the 9-day EMA above the 20-day EMA, and the 20-day EMA above the 50-day MA – we’re more likely to see an upside breakout.<\/p>\n
Bears will point to the negative divergence on the momentum indicators. They’ll also point to several previous times the moving averages were in a bullish formation, yet Bitcoin rolled over and headed lower.<\/p>\n
Both sides have valid arguments.<\/p>\n
For my money, I’m leaning more bearish than bullish at this point – simply because Bitcoin is near the top of its consolidation range. That creates a good short trade from a risk\/reward perspective.<\/p>\n
Traders can short Bitcoin here, near $103,000, with the expectation that it will move back down to the lower end of its consolidation range. That’s a potential $11,000 move. And, if Bitcoin breaks down from this pattern and heads towards $76,000, it’s a potential $27,000 move.<\/p>\n
Free Trading Resources<\/strong><\/p>\n Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/div>\n On the other hand, if Bitcoin moves higher and breaks the pattern to the upside, traders can exit the short trade on a move above $106,000 – thereby limiting the loss to $3,000.<\/p>\n Risking $3,000 to possibly make $11,000, or even $27,000, is a good risk\/reward setup for aggressive traders.<\/p>\n Conservative traders can wait until Bitcoin actually breaks out of its consolidation pattern – in one direction or the other – and then simply make a trade in the direction of the break.<\/p>\n Best regards and good trading,<\/p>\n Jeff Clark<\/p>\n
\nEditor, Market Minute<\/em><\/p>\n