Peter Brandt Challenges Bitcoin CME Traders to ‘Go Short’
Bitcoin has formed two consecutive gaps on the derivatives platform.
Veteran trader Peter Brandt appears to have taken a swipe at Bitcoin traders who make decisions based on gap formations on the Bitcoin Chicago Mercantile Exchange (CME).
The classical Chartist did this in one chirping today, pointing out that Bitcoin has formed two consecutive holes on the derivatives platform; he tweeted:
“Two big unfilled holes. I encourage you hot shot young guns to go short.”
Two large unfilled holes. I encourage you hot shot young guns to go short $BTC pic.twitter.com/YVDiEhhifD
— Peter Brandt (@PeterLBrandt) March 19, 2023
What is the CME Gap?
To understand what the CME gap is, one must first understand how CME works. It is worth noting that while crypto can be traded around the clock on crypto exchanges, the CME closes on the weekend and part of the day.
Therefore, while the futures price on the CME is fixed during this pause, Bitcoin’s price continues to move on spot exchanges. A gap is formed to catch up with the spot price when the CME opens. This gap is what is known as the CME gap. Accordingly, the gaps identified by Brandt are a result of Bitcoin’s impressive rally over the past two weekends.
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In particular, traders are often wary of these gaps as they tend to fill, implying a potential correction or reversal. But, as Brandt himself points out in the comments, this is not always true.
“The dirty little secret is that some holes may never be filled,” Brandt tweeted.
The dirty little secret is that some holes may never be filled
— Peter Brandt (@PeterLBrandt) March 20, 2023
Consequently, the CME gap, like any other indicator, is probabilistic, and making trading decisions based on it alone can be foolhardy. Additionally, gaps that fill can take weeks or months and will likely still follow the general price action.
Price action Amid a 45% rally
It is worth noting that Bitcoin has formed a significant close above the weekly horizontal resistance level. It indicates the fulfillment of the inverted head and shoulders chart pattern identified by Brandt last week.
How high the price will go from here remains to be seen. In truth, there are several possibilities. Bitcoin price may continue its impulsive move up while forming small corrective patterns.
It could also test the neck again before continuing further, preferably in the form of a steep bull flag.
Another possibility is that it could form a steeper correction to confirm a trend line formation.
Bitcoin investors seem super bullish as uncertainty surrounding banks has fueled speculation about a pause in Fed rate hikes. In particular, the leading digital resource is up 45% since Silicon Valley Bank Collapseas highlighted by Galaxy Research’s Alex Thorn yesterday.
#bitcoin up 45% since #SVB was taken over by the FDIC 👀 pic.twitter.com/64wuP7VxAV
— Alex Thorn (@intangiblecoins) March 19, 2023
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