BTCUSD update: Price retraces off the 8887 level to establish a lower high formation. This is typically a sign of weakness, but the question is: can price push below the 8044 reversal zone boundary?

BTC: The Levels
BTC USD Chart: Lower High Is Bearish But Can It Break 8044?

The 8887 is the .382 of the recent bearish swing. As long as price cannot break above it, it is reasonable to expect more bearish momentum. Keep in mind the 8626 level is the .382 of the recent bullish structure relative to the 6425 low. Price is making an attempt to stabilize here in general even though this formation looks bearish at the moment.

The important level to recognize at this point is the 8044 support which is the reversal zone boundary relative to the 8204 low. IF price can form a reversal pattern off of this level, I will be looking to enter into the next swing trade long. Not only is the 8350 reversal zone boundary also in play, but so is the 8171 level which is part of the .618 support area relative to the entire bullish structure of this market.

A qualified reversal off of the 8044 area would be considered a conservative trade because of its location and structure.

The Bearish Scenario?

Even though I am long term bullish on this market, it is important to consider short term scenarios. This helps to manage risk whether you are trading around a core position or taking individual trades.

The scenario to be mindful of is the break of the 8044 level. IF this happens, that will imply further weakness on the horizon which can lead back into the mid to low 7Ks. If you are swing trading, all you have to do is stay flat until stability returns. If you are managing inventory, then you must decide if you are willing to sustain the increased risk of lower prices. If you are not, then the only choice you have is to lighten your position and be prepared to add it back when a more favorable environment returns. Read more about position trading BTC here.

Prepare Ahead

One of the biggest problems I see over and over again with less experienced traders is they react to everything. News, rumors, hype, what other “experts” are posting. You must isolate yourself from this noise and plan your actions ahead of time based on chart “events”. If price goes to point A, then do this, if price goes to point B, then do that. This is how you help take yourself out of the equation when a decision has to be made.

In the case of preparing for the next BTC move, you have plenty of reference points to work with. If price goes to 8044, I will be looking for a reversal. If one materializes, I will go long for a swing trade and report it to our subscribers. If price breaks below, I do nothing.

One of the most important lessons you need to comprehend is in order to trade with confidence, the idea must really originate from you. Using research to help find ideas is fine, but you must clearly understand the perspective and risk as intimately as possible. And if you are unsure, or fearful of losing, then you should not risk real money. It is that simple.

Questions and comments welcome.

2 Responses
  1. Iluvatar

    Hey Marc, thanks again for a great explanation and especially for your detail on how to find these levels. I was able to follow along on my own charts, as I’m trying to learn the underlying strategy you are using, but I missed how to find the 8044 level. Even off the 8204 low, I cannot follow how to find that specific level. I’d very much appreciate if you could briefly explain you reasoning.

    1. Marc Principato

      Thank you again for reaching out. I am glad you are able to follow long on your own charts. The levels you are referring to are based on previous support/resistance levels. It is too complex to explain in this format.

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