Looking at a four-hour chart of Bitcoin , we notice that the recent rally has brought Bitcoin ( BTC ) back to a prior low point near 7300. While the snapback rally yesterday may have seemed bullish , it is in line with our theory of forced liquidation in the market. Forced liquidation, likely at the hands of Chinese authorities, can create large bounces once there is a pause in the liquidation.
So, that leaves Bitcoin ( BTC ) with a tactical wave structure that argues for one more colossal flush lower below 6k. The downside target looks like 5500.
Bottom Line: You have to be wary of chasing big snapback rallies. Headed into the Thanksgiving holiday, we fear more downside is on the horizon, and the decline could be more significant than people expect.
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