Welcome to this weekly series from the TradeRoom. My name is Dave and I’m the founder of The Crypto Den, an Australian-based crypto trading and education community aiming to give you the knowledge to take your trading game to the next level.
Crypto Market Outlook
Welcome to my first analysis of 2022! I hope everyone had a wonderful break over the holiday period and keeping safe!
Bitcoin has seen some nice bearish price action over the holidays which wasn’t overly unexpected. Coming into Christmas the warning was basically to expect volatility as the market loses liquidity it becomes easier for big swings to occur.
In my last article of 2021 I pointed out that the TOTAL market cap was hitting a key level of resistance and it failed to break through spectacularly wiping off US$500 Billion. There’s a pretty good chance we see some consolidation before more downside tot he US$1.7 Trillion level.
TOTAL market cap
Keeping it really basic this week BTC is sitting right on what’s probably the most important level of support/resistance. If this US$40,000 level of support holds my current analysis shows a bounce in price action to US$45,000 however, and here’s the warning – IF there is low volume in such a move I’d be confident in saying its a relief rally before further downside. The only point that I will become full bull again is if BTC breaks and closes above US$53,000. Yep, over a US$10,000 trading range needs to be cleared before I’m comfortable with a bullish cycle.
Does this mean I wont trade within this range? No. As Traders we stay fluid and move with the market and trade the session we are in.
For me at the moment the 2 most likely moves we will see from BTC is
a) a relief rally to US$45,000 then a large sell off of over US$10,000 taking us to US$35,000 or
b) this current level of support fails and we go straight to US$35,000 – US$30,000
Regardless I’m still expecting more downside action.
My game plan? Well I’m already in short trades on both BTC and ETH so I will keep these open until I see some candlestick analysis suggesting an uptick in price action. I will likely add to my positions if we hit the US$45,000 dead cat bounce.
In short this level of support at US$40,000 MUST hold or things will get very red very soon.
Last Week’s Performance
Apart from my 2 shorts in BTC and ETH I haven’t really been trading over the Christmas break so I don’t have any to share at this time. So I will share my entries on BTC and ETH
After the first big sell off from the beginning of December BTC seen a bounce in PA back to US$51,000 which was also the 61.8% Fibonacci retrace zone of the previous structure. My reason for entry was the 4 day rejection at this key level and buyer exhaustion wicks. On a 20x trade this short has yielded just under 400% profit in the most recent drop. This is basic price action trading using support and resistance (S&R).
Like BTC my short entry on ETH was based on the basics of S&R and Fibonacci. ETH retraced 61.8 of the previous structure and after 4 days of bearish candles I entered from a buyer exhaustion wick. This is a 10x trade a currently sitting at 250% profit. The trade is still active.
This outlines the importance of understanding candle stick analysis at key levels of support and resistance and having the patience to wait for the market to come to you.
This Week’s Trades
This week I wont be sharing any new trade entries. The reason for this is that I believe at this stage the market will see further downside and most people are buying and selling assets as appose to trading futures.
I will be keeping my short trades for BTC and ETH open unless candlestick analysis shows me a reason to close them. I MIGHT enter ALT short trades if a good setup is there but that’s a big maybe. The market needs a clear direction first.
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