The volume profile for Bitcoin over the past 4 months shows a key level at around $28,040. Historically, after Bitcoin breaks out of a trading range, it tends to spike up, get traders excited and buying, before crashing back down to retest longer timeframe volume profiles.
We've been ranging above $30,000 for a month now, causing many to forget about this $28k volume shelf. Psychologically, traders get used to above $30k prices. So when the price dives below, it sparks panic selling.
Currently, there is the potential for a short squeeze if Bitcoin spikes up toward $29,300, where there are high short liquidations waiting. This could provide a textbook short opportunity around $28,850.
On the flip side, if the price continues falling, we could see a high volume long squeeze which would lead us to one of the best long trades this year opened around the key $28,040 level.
Either way, keeping an eye on this zone and watching for liquidation spikes will be key. We should be prepared for both scenarios and have a plan ahead of time - either a long squeeze occurs and we look to short around $29,850, or we wait patiently for price to break down to our target of $28,040 to enter a long position.
The market is about to react violently and it will be important to keep emotions in check and remain stoic through the volatility.
We've been ranging above $30,000 for a month now, causing many to forget about this $28k volume shelf. Psychologically, traders get used to above $30k prices. So when the price dives below, it sparks panic selling.
Currently, there is the potential for a short squeeze if Bitcoin spikes up toward $29,300, where there are high short liquidations waiting. This could provide a textbook short opportunity around $28,850.
On the flip side, if the price continues falling, we could see a high volume long squeeze which would lead us to one of the best long trades this year opened around the key $28,040 level.
Either way, keeping an eye on this zone and watching for liquidation spikes will be key. We should be prepared for both scenarios and have a plan ahead of time - either a long squeeze occurs and we look to short around $29,850, or we wait patiently for price to break down to our target of $28,040 to enter a long position.
The market is about to react violently and it will be important to keep emotions in check and remain stoic through the volatility.
Note
The price action we've seen over the past few days has unfolded largely as I expected. Bitcoin spiked up, liquidating shorts, and then spiked back down, sparking long liquidations.However, the key $28,040 support level has not yet been reached. This is because volume remains low overall. For price to breakdown to that zone, we likely need to see high volume capitulation. This can take time to build up as we range.
It's looking like in the next day or two we may finally see price accelerate down into the volume void around $28k. But it's impossible to predict a timeframe with certainty.
The main takeaway is that the levels and scenarios I laid out are still valid, regardless of how long it takes. Having patience and not forcing a trade is crucial. Rushing in prematurely will likely end badly in this choppy environment.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.