In yesterday's note, we outlined our tactical short if Bitcoin was below 59k.
We gave the bears the benefit of the doubt, but they couldn't keep prices under 60k for long at all.
We have no shame in being wrong and flipping our approach as new data comes in. In fact, we pride ourselves on always adapting to new evidence and never being dogmatic. The quicker we know we're wrong the better, because we can move on to bigger and better opportunities. In this case, we knew in just a few short hours!
This seems like a textbook failed head-and-shoulders pattern right now:
![](https://media-allstarcharts.s3.amazonaws.com/wp-content/uploads/2021/10/FCyPByzWUAYXCpH.png)
We like it best when patterns don't work, because it can create a major whipsaw that can send prices immediately higher. For a deeper dive into why this is the case, read this old post of ours.
So, with our shorts positions quickly closed, it's now irresponsible to be short if Bitcoin's above 60k.
Given that bears couldn't get this done, we now need to give the benefit of the doubt to the bulls.
If that upside momentum wanes and prices fall back below all this support, then we can begin our discussions of having a more bearish outlook.
But, looking at the data right in front of us, this appears to be a failed breakdown, and now the bias is higher.
Relative Strength Is Everything
In case we haven't been obnoxious enough over the last few months, relative strength is the single most important tool for navigating choppy environments like these (or any environment, for that matter).
For a brief period, Bitcoin was certainly in the driver's seat.
But in a note last week, we argued that:
It looks like Bitcoin could be due for a rest relative to its counterparts.
Rotating Bitcoin profits into the coins showing relative strength makes sense right now.
The recent relative rotation back to Ethereum and the altcoins supports our view, and looking down the cap scale for opportunities makes sense right now.
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