- Bitcoin will break out again.
- Some sideways price action is positive.
- Be ready to buy strength.
Silence suggests we’re about to turn a corner.
It’s quiet in the cryptocurrency market.
And that’s a good thing. Prices have stopped falling.
Some sideways action while the chatter is low is good information.
Here’s how to see our next opportunity to buy Bitcoin (BTC) – before it breaks out.
Before the Breakout
Crypto isn’t magic. It isn’t even that mysterious. Cryptos have prices. Those prices trend. And big price moves are about positioning.
(As I always say “price is the only thing that pays.”)
We use the same tools to identify patterns and signals. It just doesn’t matter whether we’re trading stocks, commodities, futures, or forex.
And we actually have more visibility on buy-and-sell moves in the crypto market than we do with old-school markets.
It’s all right there – “on chain,” in real time – 24 hours a day, seven days a week.
But you have to know what you’re looking at. So let’s talk about what we’re seeing with Bitcoin.
Here’s a short-term view:
This is a one-month chart. It shows BTC as it bounced 15% off its March 11 low and then retraced 61.8% of that rally.
We use our retracement tool to identify the end of a counter-trend market move.
It can be the end of a sell-off within a larger uptrend or the end of a rally within a larger downtrend.
Retracements can be applied to all time frames across price history.
Bitcoin is trying to find support at the 61.8% retracement of that March move.
There’s very little price memory at these levels. But we know there are three ways forward. Bitcoin can go higher. It can go lower. Or it can go sideways.
If you’re a tactical, short-term trader, you can use the 61.8% retracement to define your risk.
A close below the 61.8% retracement indicates a retest of the March 11 low is likely.
If it holds, this is a logical place for buyers to dig in. This is a very short term, tactical setup.
Let’s zoom out for a bigger-picture view and a better risk-reward roadmap:
This is a one-year chart. I like to buy strength, so we’re looking for Bitcoin to reclaim $90,000.
A close above that level indicates bulls are back in control. The path of least resistance from there is higher.
What if Bitcoin moves lower? We can buy on weakness too. The level we want to use is $70,000, where former resistance turns into support.
Our odds of success improve with strength, though.
And a close above $90,000 is an indication Bitcoin is breaking out to new all-time highs.
Any Given Market
Technical analysis gives us the rules and the tools to trade any market, anytime, anywhere.
Which is cool, because the crypto market is always open.
At some point, though, any market in an uptrend will correct. Nothing goes straight up, whether it’s Bitcoin, Gold or Nvidia (NVDA).
Our retracement analysis suggests bitcoin has stopped going down. It must go sideways for a while.
Then it will go back up again. We’ll be ready for that move.
We’re already seeing the beginning stages of it.
Stay sharp,
JC Parets, CMT
Founder, TrendLabs