"Jack's Trading Classroom: Perspectives on the BTCUSD Avalanche-Like Drop"

Original trading classroom by Jack, "Perspectives on the BTCUSD Avalanche-style Downfall"

On March 12, 2020, we published an analysis titled "BTCUSD Bearish Sentiment Continues to Rise." In the article "BTCUSD Bearish Sentiment Continues to Rise," we mentioned that "due to the retracement from the Fibonacci sequence levels of 61.8% and 23.5% from the top, and the downward structure still remains intact, the EMA exponential moving average also shows a downward crossover with diverging gaps, indicating a basic bearish moving average alignment. Therefore, we can still maintain the same trading strategy as in the previous article. In the future, we can still expect a downside target to the Fibonacci sequence level of 161.8% at 7078.0 as mentioned before."

At that time, based on the head and shoulders pattern at the top along with trend analysis, BTCUSD was viewed as bearish. Subsequently, the BTCUSD price dropped to the expected range of the Fibonacci sequence level at 7078.0, and the lower support level was broken through as if it were non-existent, with the price hitting a low of 3730.0, followed by a rebound to consolidate above 5200.

Today, we see the daily chart of BTCUSD, where we can observe that the current BTCUSD price is right at the support level near 5227.0 for the weekly chart. Similar to the volatile market movements in the past, we can anticipate a prolonged period of consolidation in this range, which will likely determine the direction after the pattern formation. Given the significant volatility in this consolidation range, it is not advisable for traders to engage in high leverage contract trading. A more prudent approach would be to wait for reversal patterns to appear at the bottom and then enter with contracts at lower leverage, or traders can attempt spot trading before the bottom at 3730.0 is breached, with 3832.5 serving as the support level on the daily chart where traders can set stop-loss orders.

Upper resistance levels
R1 6436.0
R2 7190.0
R3 8202.0
R4 9419.0
R5 10315.0

Lower support levels
S1 5227.0
S2 3832.5

In recent days, the cryptocurrency market has experienced significant volatility. It is recommended that traders strictly adhere to risk management practices and avoid high leverage and high contract volumes to prevent additional losses caused by volatile market conditions. This article reflects personal opinions, and readers are advised to use caution when considering it. Cryptocurrency trading may pose risks to your capital.

WeChat Official Account: Jack's Trading Classroom
Personal Website: jackbtc.io

Related Readings

• "Jack's Trading Classroom" BTCUSD Bearish Sentiment Continues to Rise
• "Jack's Trading Classroom" BTCUSD Forms Downward Pattern Again in the Mid-term

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