Bitcoin has deviated from its historical price action tendencies and reached new all-time highs before the bitcoin halving and without touching lifetime support! Does that mean we will continue to go up?
How do we trade this? 🤔 Bitcoin is clearly at a crucial moment in the market, breaking beyond the previous $69,500 all-time high and reaching just shy of $74,000. Without surprise, Bitcoin is facing some resistance in this area as the bulls take some profits and the bears lurk waiting for a solid sell candle.
At this stage, we do not have a sell candle to justify a short. My previous analysis called for a 30% pullback or more between the $45,000 and $55,000 area if the proper sell candle and confirmation bars showed themselves, we never received those candles. I am still in the same mindset; be on the lookout for a major pullback, but wait for the proper sell and confirmation to short. Long scalp on the smaller timeframes, 5m or 15m until the price action no longer justifies it.
I believe the more lucrative opportunity will show itself after a major pullback occurs to the $38,000 price area. This area provided great trade volume and has acted as support and resistance several times in the past few years. It's reasonable to believe this will be a solid floor for Bitcoin. The hard lifetime support floor is approximately $25,000 leading into 2025, but I think it's unlikely at this point to see such a pullback. $38,000 is the more likely support level as that should coincide with the Weekly 200EMA later this year/early next year if the price is to fall that far. We also have to consider that the price may not fall below the Weekly 30EMA or come near the Weekly 200EMA and should be looking for a buy signal at any of these support zones.
For now, I would long trade the smaller timeframes and be on the lookout for the sell signal candle on the weekly chart.
💡 Trade Idea 💡
Long Entry: $42,000 🟥 Stop Loss: $25,000 ✅ Take Profit #1: $69,000 ✅ Take Profit #2: $110,000 ⚖️ Risk/Reward Ratio: 1:4
🔑 Key Takeaways 🔑
1. At previous all-time high resistance, not ideal long entry on Daily or Weekly timeframe. 2. Wait for sell signal on Daily or Weekly timeframes to enter a short. 3. Target Weekly 30EMA, 200EMA, and previous high volume area for support. 4. Long at $42,000 after a strong buy signal off of the high volume area, target 1:4 Risk/Reward and take half of the position off the table at $69,000, move stop loss up to entry and swing the latter half of the position to the $110,000 area. 5. RSI is overbought near 85.00 which supports a pullback and hesitation to long.
💰 Trading Tip 💰 It's reasonable to take half profits at the first resistance target in a long trade, or the first support target in a short trade. Using a 1:1 Risk/Reward Ratio for your first target, you can move your stop loss up to your entry price, locking in profits. This allows you to watch the rest of the trade execute without worry of losing money. This helps improve trading psychology and the equity in your account.
⚠️ Risk Warning! ⚠️ Past performance is not necessarily indicative of future results. You are solely responsible for your trades. Trade at your own risk!
this is rational analysis in an irrational market, which why I think it will not exactly play out this way...but I am short until 51.2k for now.
TraderEngineering
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Hi @handyrams8! I appreciate the comment! I would say that markets are "rational" in the sense that they can be accurately described and explained by human psychology which has repeatable and identifiable characteristics and patterns. This is the foundation of Price Action Theory which is what my analysis are predicated on. If you look back through my charts you'll notice that my analyses are conditional. I've had three or four Bitcoin charts looking for the reversal entries from back in the $45,000-$53,000 areas; none of which provided us the appropriate candles to justify a short entry. I never like to release an analysis without a trade plan, so I include what I believe is the best trade idea for the timeframe we're on. The Weekly chart still lacks a sell signal but I believe one is highly probable based on my analysis.
It's reasonable to short on a lower timeframe like the 4HR or Daily for sure if that signal appears, at least to the Weekly 30EMA which is right about where your $51,200 target is. So that was the long way of saying, I don't disagree with you! But I have to follow my analysis which includes using my probability values based on price history which governs how I manage trades. If the price continues to go up, it still wouldn't have been wise to long the Weekly chart given my dataset.
I think your trade target is likely and wish you well on it! Thanks again for the comment and like!
handyrams8
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@TraderEngineering you're welcome and thanks for taking the time to type all that.
@mysaveacc1250, I think your prices are reasonable. Lifetime Support and Resistance give us the absolute extremes based on price action history, but probability of hitting the extremes is obviously lower than prices closer to the Moving Averages. I think $100,000 will be a psychological resistance at the very least, making $97,000 an ideal take profit area. I advocate for taking profits at the close of each leg if possible, but it's also reasonable to take profits as I've described in my analysis; half at $69,000 and swing the rest to $110,000 or if we witness a reversal pattern and confirmation.