With Bitcoin’s price having broken below a support level of some importance, traders are left to wonder if a major bearish trend is in the offing. A case for further downside can be made from the market’s recent behavior and attendant risks, as the latest analysis on the CryptoJack channel suggests.
What Triggered the Bitcoin Price Dive?
In the last day alone, the crypto market has seen $1.13 billion in liquidations. The guest trader on CryptoJack points to this as a sharp move that has accompanied Bitcoin slipping under a key support, which was once a resistance point. It is a breakdown that many would read as a bearish signal, an indication that any prior optimism is giving way to negative sentiment.
Potential Risks Ahead: The 50-Week Moving Average
The trader was at pains to stress that with this support gone, Bitcoin could be embarking on a sizeable bearish trend. To put it in perspective for the uninitiated: support is where one would expect buyers to make their stand; when it is ceded to the sellers, more losses tend to follow.
Looking ahead, the next technical risk is Bitcoin making its way to the 50-week moving average, a long-term trend indicator that is followed by most traders. “Very dangerous” for the market is how the trader on CryptoJack described the situation should the price test that level. A drop of consequence below the 50-week moving average may well usher in a more overt bear market, leaving short sellers with the advantage.
Trader’s Position and Short-Term Targets
The trader has put his money where his mouth is with a short position on Bitcoin, entering at $87,000 and already up $17,000. Should the bears keep up their momentum, $77,000 is the figure they have in mind for the next target.
For their trading, the guest favors Calci, a U.S.-friendly platform with perpetual contracts and prediction markets that offers the kind of flexibility and range of tools one wants in volatile conditions.
What This Means for Newcomers
All of which is to say the warnings and price action we have been seeing on CryptoJack are a reminder of what good risk management entails. For the novice, technical breakdowns and big swings in price are as much an opportunity as a risk, but they call for a cautious approach. As the trader makes clear, a fall under the 50-week moving average would be a telling change in the market’s direction; it is an indicator beginners would do well to heed before putting on a trade.
This article reflects the channel author’s opinion and is not investment advice.
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Source — CryptoJack: https://www.youtube.com/watch?v=o0rRQKXM1kI
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