Bitcoin is down to around 4,036. I still favor more downside in the market than what we are seeing right now, but I will just say my predictive ability is not perfect. A lot of chart people on tradingview are favoring the 3,600 level still for the same reason I am. One of the main reasons is that when a trendline in bitcoin was broken in the past, we tend to see a couple moves lower. Had the China announcement never occurred, this first dip should have actually held above the trendline, and today we would be seeing the dip below the trendline.
There is a few ways to handle this. If you have an investment mentality toward bitcoin, buying in stages and on dips should be solid.
If you are treating this more like a trend trade as I have been lately, then we might wait for the market to confirm a bottom. This means we could miss the absolute sell-off and the best prices, but it might result in buying lower than what we are seeing today, for a person who looks for some type of technical analysis confirmation of a recovery.
What a reversal would look like if it happened this month
If in this decline, if 4,000 holds (the prior low), and we see a rally up above that red support/resistance line, than this would be bullish. When a trend is broken, the secondary bear rally that we have seen over the last few days is generally never reached until the declines are finished. This means if I see BTC touching up above 4,450 next week this could be pretty bullish if there were a break-out above that red area on the chart below. It would be indicative of a reversal and a retest of the highs.
Below 4,000 there are also different support levels the market has used in the past, 3,900, 3,800, and 3,600. It could be BTC may find a higher support level than the 3,600 but below 4,000.
The Risk of Waiting
Let's say we believe my analysis here about the red zone. If this 4k decline we are seeing now were the bottom, we could then become bullish again when BTC breaks above 4,500. This is a 12% missing out if we are having a double bottom at 4,000.
The Reward of Waiting
The possible reward of waiting is not easily quantified because it could be any number of support zones below 4,000. The downside could be anywhere from 3,900 to 3,100. (3% to 23%), technical analysis still favoring 3,600 (11%).
It is on the alt-coin market where a 3,600 decline in Bitcoin could be hard to watch.