Bitcoin: A falling knife or a good investment opporunity?
|Many crypto traders (and not only crypto traders) are concerned about the recent free fall of Bitcoin (BTCUSD). When we see the situation like this, we ask whether it is a good investment (trading) opportunity or, conversely, a good opportunity to go short.
In a previous article, I had written that I expect BTCUSD to achieve a $3000-$4000 target area. It had happened several days ago. What’s next?
Weekly perspective
Let’s turn to the weekly chart of BTCUSD.
We would be surprised but we can apply very simple technical patterns when it comes to analyzing BTCUSD (it is not a very tricky market). For example, we can build a symmetrical measured move (“AB = CD”). When you try to project a target area, it makes sense to take the height of a previous consolidation and project it to the downside.
That’s the way we get the approximate target. Sounds simple, huh? But that’s the way it works.
To buy or not to buy?
All of the said above doesn’t mean that you have to immediately jump into the trade.
When the price reaches the target, it doesn’t automatically open the opportunity to reverse your trade. More than likely price action just stops and starts rotating back and forth.
If let’s say, you are a long-term crypto investor, I would treat the current price of BTC as a good bargain. But from a trader’s standpoint, the opportunity may not be defined yet. If the price of BTC sharply soars, I would consider selling around $5000-5500 area (see my previous article).
That’s all for today. Have a good trading day ahead and a good weekend. Good luck!
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