Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Chart Of The Day: Bitcoin To $1 Million? Not A Chance Right Now

Published 01/26/2022, 09:36 AM
Updated 09/02/2020, 02:05 AM

Listen up, all you Bitcoin bulls who think this current rally is a return to happier days for cryptocurrencies. We're sorry to disappoint, but we anticipate the number-one digital token by market cap will repeat its most recent selloff, for an array of fundamental and technical reasons.

After BTC briefly fell below $33,000 on Monday, Jan. 24, dropping 50% from its November record high, some investors—no doubt the very same ones who talked up the notion of Bitcoin going to $100,000 and eventually to $1 million—are now cowering at the notion of another 'crypto winter' in the wake of the leading digital token's rapid descent.

Still, some analysts remain positive on Bitcoin, even if they no longer see $100K on the immediate horizon. Cathie Wood, ARK Invest Management's leader is even more bullish; she believes the digital currency will push past $1 million by 2030.

Current technicals, however, are much more bleak.

BTCUSD Daily

The immediate, ongoing advance is in the form of a Rising Flag, a bearish pattern presumed to be short covering after a sharp selloff. The flag's bearish bias is better understood when realizing it's developing within a down-channel, a clearly defined falling trend.

If we're right, this flag will be the second in a row. The first flag developed in the immediate aftermath of a large H&S top. That move dragged the 50 DMA below the 200 DMA, triggering an ominous Death Cross.

While we can't speak for the longer-term timeframes Bitcoin bulls may be talking about, we remain bearish on the token right now and continue to target $30K. However, if the price decisively slips through $28K we see BTC falling a lot lower.

Trading Strategies

Conservative traders should wait for a downside breakout of the flag, with a close below the Jan. 24 low, then a return move to retest the flag's integrity.

Moderate traders would short a downside breakout with a close below $35,000 and wait for a corrective rally for a safer entry.

Aggressive traders could short at will according to a coherent trade plan. Here's a sample:

Trade Sample

  • Entry: $39,000
  • Stop-Loss: $40,000
  • Risk: $1,000
  • Target: $30,000
  • Reward: $9,000
  • Risk-Reward Ratio: 1:9

Author's Note: We're not in the fortune-telling business. A technical forecast is an expectation based on analysis derived from historical data. We do not know what will happen with this particular trade. All we're saying is that if traders behave as they have previously in this situation, the outcome is more likely to follow through in a certain way, as described above, based on our interpretation. To increase the odds for improved returns overall, you need to learn how to write a plan that meets your timing, budget, and temperament rather than work on a trade-by-trade basis. Until you know how to do that, use our samples to practice, but don't necessarily expect profits, which you could hope for only after gaining enough experience to develop your trading style. Happy trading!

Latest comments

appreciate the logical measure
Appreciate the logical measured approach you take in your reads. Qualifying your points by risk and time frame with cavaets.Meanwhile BTC /cryptos remain more like Tulips.
what is your winning percentage?
It depends on Powell’s general decision about market today it might or might not happen depends on news and momentum not on fundamentals
Agree that BTC never relies on fundamentals…hard to put the two in same sentence with out cringing;)
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.