Introduction
Bitcoin has plunged to levels not seen since February, briefly dipping below the $50,000 mark. This dramatic sell-off comes just days after Bitcoin was flirting with the $70,000 level.
This is part of a broader market sell-off triggered by renewed recession fears, as even the big indices started falling on Monday. Investors, already on edge, were further rattled by a disappointing July jobs report that fell short of expectations.
Bitcoin had shed over 14% of its value on Monday alone, trading at $50,963.57. It was trading at $69,982 just a week ago.
Technical Analysis
At this point, it can be tempting for long-term investors to try and catch the bottom but we should try and wait for a more definitive bottom signal. We could see the sell-off continue as fear spreads until we eventually get the capitulation where the volume spike comes with a big red candle. This could be the capitulation right now but time will tell.
While we wait for a definitive bottom, we could look for the $40,000 level as an entry zone.
Trade Setups:
Reversal Trade at Key Support:
- Entry: Around $40,000
- Stop-Loss: Below $38,000
If price drops below this level we would look at new technicals because that will likely mean there is something severe occurring in the world economy.
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