Technical Analysis: Bitcoin Flushes Hard, Here Is The Level It MUST Hold

Key Concepts

• Technical Analysis: Using historical price and volume data to predict future price movements.
• Trend Lines: Lines drawn on a chart connecting significant price points (highs or lows) to identify potential support or resistance levels.
• Support Level: A price level where a downtrend is expected to pause due to a concentration of demand.
• Resistance Level: A price level where an uptrend is expected to pause due to a concentration of supply.
• Probability-Based Trading: Approaching trading decisions by assessing the likelihood of different outcomes based on technical indicators and historical patterns.
• Risk Management: Strategies employed to minimize potential losses in trading, including planning for adverse scenarios.
• Emotional Discipline: The ability to make rational trading decisions without being influenced by external narratives or personal emotions.

Bitcoin Technical Analysis and Trading Strategy

This video by Gareth Soloway, Chief Market Strategist at Verified Investing, focuses on a technical analysis of Bitcoin's recent price action and provides insights into a probability-based trading approach.

Bitcoin's Recent Price Action and Key Levels

• Previous High Prediction: Soloway had previously predicted a Bitcoin high around $126,200, which the cryptocurrency subsequently reached.
• Current Pullback: Bitcoin is currently experiencing a pullback and is approaching a critical technical support level.
• Next Major Battleground: The next significant challenge or "battle" for Bitcoin is expected at the $118,000 level.

Methodology for Identifying Key Levels

• Simple Trend Line Analysis: Soloway emphasizes a "keep it simple" approach, utilizing basic trend lines drawn on regular (non-logarithmic) charts.
• Connecting Historical Highs: The identified high around $126,200 was determined by drawing a straight trend line connecting the 2017 bull market high to the 2021 high.
• Common Sense and Probability: The rationale behind identifying these levels is based on observing historical price behavior. Soloway states, "every time we hit this level, we get a pullback." He stresses that trading is a "probability game," and traders should position themselves on the side of higher probabilities of success.
• Avoiding Emotional Influence: Soloway advises against being swayed by social media or mainstream media narratives (e.g., "dollarization," predictions of extreme price increases). His focus remains solely on chart analysis.

Detailed Analysis of the $118,000 Support Level

• Historical Significance: The $118,000 level is identified as a "huge level" with significant historical importance.
• Visual Evidence: By extending a trend line from previous lows, the chart demonstrates how this level has acted as support multiple times in the past.
  • The line connects "low pivot to low pivot."
  • The transcript notes this line has been "tagged on one side or the other, and it's been major" approximately "50 times."
• Past Behavior: The level has seen instances of breaking above, pausing, breaking below, and retesting. The recent break above this level was a precursor to the new all-time high.

Potential Downside Scenarios

• Break Below $118,000: If Bitcoin breaks and confirms a close below the $118,000 to $117,500 range, the next likely target is around $111,000.
  • This $111,000 level is also identified as a significant support based on trend line analysis.
• Break Below $111,000: If the $111,000 level breaks, the price could fall further, potentially to sub-$100,000.

Potential Upside Scenario

• Holding Support: Soloway acknowledges that the $118,000 level could hold, leading to a potential bounce back up and a retest of the previous high around $126,000.

Trading Strategy and Risk Management

• Power of Knowing Levels: Understanding these technical levels provides traders with "power to put probabilities in your favor massively and make educated decisions."
• Verified Investing Services: Soloway mentions "Smart Money Crypto," a service at Verified Investing where he provides swing trades on crypto. He notes that they shorted Bitcoin at $118,200 and have already taken half their position off the table on the pullback.
• The Importance of Planning for Both Sides: A good investor and trader must consider both potential upside and downside risks.
  • If long, what is the downside risk?
  • If short, what is the upside risk?
• Avoiding the "Mercy of the Market": The general public often jumps into trades based on hype without a plan, leaving them "handcuffed and at the mercy of the market." Soloway advocates for a "boxer's mindset" – being able to maneuver and dodge market movements.
• "Assuming the Worst" Mentality: Soloway advises entering trades by asking, "If this goes wrong, what do I do?" This mindset:
  • Prevents going "all in" and putting "all your eggs in one basket."
  • Limits potential losses.
  • Shifts the mindset to make more money over the long term.
• Learning from Mistakes: Soloway shares his own experience of making "every worst trade in the world" over his 25-26 years of trading, emphasizing that this education can save others money.

Conclusion and Takeaways

The core message is to rely on objective, fact-based technical analysis, specifically trend lines, to make probability-based trading decisions. This approach, combined with a disciplined risk management strategy that anticipates potential adverse outcomes, is crucial for long-term success in the volatile cryptocurrency market. The current focus is on the critical $118,000 support level for Bitcoin, with clear potential downside targets if it breaks.