In-Depth Review of What Caused the Dump - What Will Happen NEXT?

In this technical analysis I will walk you through the recent price action on BTC, starting with how the parabola got developed, where it got broken, and the massive reaction that followed upon it shortly after. Then, I will explain what I think is important to look at next.

First of all, let's do a quick recap of the parabola. In my last few ideas on BTC you can see I have been closely following this exponential trend. Definitely one of the more beautiful parabolas I've seen. Even now you might wonder, "but trading-guru, the parabola got broken right so it got already invalidated.". Well, I see it slightly differently. Look what happened exactly at the moment the price broke out of the parabola.

There was a MASSIVE response to the parabola being broken, with an immediate 10% loss (first ~5% till the parabola and then an instant extra 10%). To me this confirms that people are looking at this technical pattern (trading consists of 50% self-fulfilling prophecies) and that the parabola does hold future value.

It's the same as with horizontal support and resistance zones. You can use them to bet on reversals, but when there is a break-out you often see very strong responses!

The great thing about the drop in value is that we finally got some prices again we can work with on the chart. I am not a big fan of charting rising prices in white charting canvas. I mostly appreciate horizontal zones, more than technical indicators and such (I do occasionally use them, not saying they are bad. Just trying to support my case with price action first).

I charted the first horizontal zones here on the 1h, and I imagine over the following days I will publish a few more ideas with newly created zones. If we want the price of BTC to stay high, our eyes need to be on this zone.

If this zone holds, I would say we can go in for a nice long trade again, but if it breaks I will keep my short recommendation for a bit longer.

Trading is just mapping risk-reward set-ups over a long period of time to get the statistics working in your favor. In this case if you have good risk-reward it doesn't matter too much if you're going long or short near the support zone. I suggest betting on the long reversal as close as possible near the support zone since the price already dropped 15% and it does look like the bears have lost their momentum.

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- Trading Guru

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Disclaimer!
This post does not provide financial advice. It is for educational purposes only!