Review of the early trading in the East 8th District, is Bitcoin really going to rebound? Will the bottom-fishing plan need to be revised?
Hello everyone, I am Vke, welcome to (Bitcoin Market Analysis War Room)! This channel publishes two programs every day, one in the morning and one in the evening, providing market analysis of Bitcoin and other currencies to meet the needs of market analysis partners in different cities. Today we will review together, has Bitcoin really encountered strong support?
Yesterday's market trends
First, let's take a look at the market. Yesterday, Bitcoin closed with a big negative column (this is the daily line). However, this big negative column did not engulf the opening price of the big negative column the day before (US$94,500 to US$94,950). Failure to break this point means that a true "evening star" pattern has not been formed. Therefore, there may be some turning points here.
Possibility of a turning point
In yesterday's program, I mentioned that Bitcoin might encounter strong support and could rebound. However, I believe the probability of a rebound is not particularly high because the market data at that time and the market was just recovering from Christmas, which did not support a strong rebound. Therefore, I suggest that everyone can try to buy near $96,000 with only 20% of their position.
Technical analysis: RSI oversold area
Today, let's take a look at the morning situation. From the smaller time frame charts, the RSI has entered the oversold area, and there have been multiple oversold signals on the hourly level. This suggests that Bitcoin may have encountered a temporary bottom. We can also see that the candlestick pattern shows signs of support.
Doji and engulfing patterns: Rebound signal?
We see that at the bottom of the small oscillation box, there are quite a few dojis appearing, and these dojis show long lower shadows. This usually means that the bullish power in the market is stronger. Especially since these candlestick combinations display an engulfing pattern, indicating the possibility of a rebound.
If the next candlestick can break through the current high, it may enter a period of rebound. As for why there is support at this position, we can see that the previous support level is here, and it is also the Fibonacci 0.618 level. The combination of multiple technical indicators increases the likelihood of a rebound.
Current market liquidity
From the 6-hour chart, Bitcoin has shown a net inflow, indicating that market funds are flowing in. This is a very important signal, especially after the US stock market opens, Bitcoin ETF has also started to have net inflows.
Distribution of short and long positions
In the liquidation map, the number of long positions around Bitcoin is relatively small, while the number of short positions is slightly more. Therefore, the current price increase may be driven by the covering of short positions.
Adjust bottom-buying strategy: from 20% to 50%
Considering the current market changes, I recommend adjusting the bottom-buying strategy. The original plan was to buy near $96,000 with a 20% position, which can now be increased to 50%. Of course, it should be noted that the additional 30% position is for swing trading, and it should be exited when reaching a high position.
If the rebound is successful, we expect this rebound will not directly reverse the market and may still be in an oscillation range. We can implement a high sell, low buy strategy within this range.
Contract operation suggestions
If you are participating in contract operations, after breaking through the bottom box, you can try to make a small long position. The target price after breaking through the box is about $97,000. This range is not large, about $1,000.
However, if an unexpected market movement occurs, such as dipping to the Fibonacci 0.66 level and then rebounding back above 0.618, a long position with a stop-loss can be taken at this position. At this time, the rebound space will be larger, with a potential of 2400 points.
Summary
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