Last Friday, we discussed a macro resistance level bitcoin would likely test. The level was tested three times prior and immediately rejected. Now, for the fourth time, we find ourselves situated above the level as we wait to see if our support holds:Figure 1: BTC-USD, Daily Candles, Fourth Test of Macro ResistanceThe first three attempts to hold support above the black, broken resistance have been stifled with relatively high amounts of volume. However, something to note is that the three rejections of the overhead resistance have become weaker and weaker. Now, on our fourth attempt, we are doing so in a very meandering/drifting manner. Typically, impulsive moves (like the last three attempts) react with impulsive moves in response to the strong move into the level. Grinding moves, however, (like the fourth attempt we are currently experiencing) are often tactics used to trap early shorters and not allow them an opportunity to exit. This sort of position stacking often leads to a “short squeeze.”A short squeeze occurs when the market stacks a large amount of people trapped in a position without an opportunity to exit. As the market drifts upward, more and more people continue to short the market expecting a pullback. And, in some cases, the market continues to drift upward, causing these short positions to go deeper and deeper into a losing position.Ultimately, these positions hit a breaking point where they will either be ...
