Trading Bitcoin: Dump to $8k Incoming?

Dump to $8k Incoming?

Dump to $8k Incoming: After reaching a low of $9.7k earlier this morning, Bitcoin has now rallied back above $10k. Additionally, the TD Sequential indicator is currently on a red 2 of 9 candle on the daily chart above. If our current red 2 candle closes below $10.1k, then a short trade will be activated on the daily time frame. Also, the support level at $9.5k will be the last line of defense for the bulls. Next week, the sequential setup trend line, the 0.382 fibonacci level, and the 128MA will all align to form a confluence of support at $9.5k. If price breaks below this level, every fibonacci trader and algorithmic bot will sell until we reach the 200MA at roughly $7.2k. A decrease to this price level would present an excellent opportunity to buy the dip.

Ideally, the bears want an immediate breakdown into the $7k-$8k price channel within the next few weeks. The longer price continues to consolidate in the no trade zone ($10k-$11.5k), the more likely price action will flip bullish.

4 Hour

Bitcoin is currently on a red 4 of 9 candle on the 4 hour chart above. Right now, the 4 hour chart is in bearish territory with all three moving averages acting as overhead resistance at roughly $10.4k. Moreover, the Lucid Parabolic SAR (blue x’s) is also serving as overhead resistance at $10,150.

Crypto Fear & Greed Index

Above is a chart of the crypto fear and greed index. As you can see from the chart above, we are at the most fearful point of market sentiment since the indicator’s creation. Therefore, it should be very difficult to climb back above $11.5k anytime soon with our current market sentiment.

BTC Shorts Bitfinex

In addition, Bitcoin shorts have fallen drastically within the last few days. Therefore, a hypothetical short squeeze will not power the market higher until a large amount of shorts begin to stack up.

Conclusion

Overall, Bitcoin is still in a no trade zone from $10k-$11.5k. The last line of defense for the bears is $9.5k. If price should fall below this critical support level, then a retest of $7.2k-$8k is probable. Until the bulls can break above $11.5k, there is no legitimate case for the bulls. In all likelihood, the bears will bring Bitcoin below $9.5k in the next few weeks. That being said, the longer we remain in a consolidation phase the better the odds are for the bulls.

Disclaimer: The author of the article hodls Bitcoin.