Technical Analysis | New Dimension 2021/06/05 BTC Recent Risk Warning in the Cryptocurrency Market

TA TESTING is currently a market analyst collaborating with Binance in the Taiwan market, focusing on analysis of the US stock market and cryptocurrency market. With professional insights and expertise, TA TESTING will regularly share case studies or strategies related to the cryptocurrency market in the New Dimension column in the future, providing the community with a healthy channel to understand the cryptocurrency market and learn market analysis.

BTC Weekly and Daily Chart

Referring to the BTC 1W (weekly chart) in the above image, if you had entered the market around BTC = 33000 and ETH = 2200 during the downtrend two weeks ago, the reason for buying at that time should have been the potential for a weekly buy point due to an "upward trend on the weekly chart and downward trend on the daily chart." This buy point mainly relies on the larger negative deviation on the daily chart (the difference between the price and the moving average, which roughly depicts the so-called "degree of overselling") causing the price to momentarily rebound after hitting bottom.

This type of bottom rebound has two characteristics, which can be explained using the BTC 4H (4-hour chart) in the image above:

• The lowest point should not be challenged, especially avoiding new lows
• After hitting bottom, the price will instantly rise above the short-term moving average (here using 4H MA25) and will attack upwards along with the short-term moving average to form a major trend reversal

The main reason behind this is "once the market sell-off is over, the chips are clean and easy to boost."

In the above image, after hitting the lowest point and quickly rebounding, an unchallenged low point was reached (around 30000). By creating a short-term bottom with the second wave of deviation, the price quickly rose above the 4H MA25 moving average (purple line) after the rebound following the second deviation downtrend.

After rising above the moving average, a successful retest of the moving average at point A occurred, and the short-term attempt to break the resistance at 42000 (the upper limit of the previous consolidation range and the descending 1D MA25 moving average) was made. This attempt was crucial because it determined whether the short-term uptrend formed at the 4H bottom could extend into a daily uptrend.

However, this attack failed at point B after breaking below the 4H MA25 again, leading to a consolidation at the daily level since then.

Now, two weeks later, reviewing the BTC 1W and 1D charts (below), BTC is currently undergoing a relatively weak horizontal consolidation, and the 1D MA25 moving average (purple line in the image below) has gradually approached the price over the past two weeks. The trend of the past two days has also preliminarily shown the pressure brought by this moving average. With the price falling below the 4H MA25 once again in the past few hours, it has weakened. There has been no expected oversold rebound, and as the 1D MA25 gradually descends, the initial reasons for entering the market are fading. Therefore, the risk in the cryptocurrency market at this point is gradually rising, and adjustments are recommended to reduce risk.

Referring to the BTC 1D (daily chart) in the image above, it currently appears to be a downward continuation consolidation, with the possibility of moving further downward before experiencing a sudden lift before a rebound (of course, this may or may not happen). Market risks arise from these uncertainties; therefore, investors who are bullish should carefully control their positions to reduce risk (ideally entering the market again when a buying opportunity emerges), while bearish investors should adjust their profit-taking and stop-loss positions in a timely manner to avoid chasing shorts excessively during a decline.

As the saying goes, do what needs to be done.

ETH

ETH, which is relatively strong, is currently struggling at the edge of the yellow upward trend line. Breaking below it could easily lead to an overall market weakening, posing a risk.

Disclaimer

This article is for educational purposes only and does not constitute investment advice.

Cryptocurrency markets are highly volatile, so please invest cautiously. Personal opinions are subjective and may not be suitable for everyone; they are for reference only and not trading recommendations.

All analyses are based on the current market situation and do not predict future market changes; the author is writing out of interest and is not responsible for tracking all subsequent developments. It is recommended to maintain operational flexibility and adaptability.

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