As observed in the current 4-hour chart, Bitcoin has undergone a decline, currently trading at $65,732, reflecting a drop of 2.49% from the previous high. The market has seen a period of consolidation followed by a breakdown from a recent peak near $68,000, indicating potential weakness in the short term.

Key Levels

  1. Resistance: Immediate resistance lies at $68,000, which has proven to be a tough barrier for Bitcoin. It coincides with previous highs, where the price faced rejection.

  2. Support: Key support is around the $64,000 level, slightly below the current price. This level has provided stability in recent market movements and may act as a short-term floor for Bitcoin.

Trend Analysis

  1. Short-term Trend: Bearish. The price is currently in a corrective phase after failing to sustain the breakout above $68,000.

  2. Moving Averages: The recent downward move suggests that Bitcoin might be trading below key short-term moving averages like the 50-period EMA on this timeframe, signaling potential further downside pressure.

Trade Idea

Given the overall market structure, there are two potential strategies traders can consider.

Short Position Setup

  • Entry Point: If Bitcoin breaks below the $64,000 support, a short position may be initiated, targeting further downside to the next key support zone around $62,000.

  • Stop-Loss: Place a stop-loss above $65,800, just above the recent highs, to minimize risk.

  • Target: $62,000, providing a favorable risk-reward ratio if the bearish momentum continues.

Long Position Setup

  • Entry Point: If Bitcoin holds the $64,000 support and shows signs of reversal (such as a bullish candlestick pattern), a long trade could be considered, targeting a rebound towards $68,000.

  • Stop-Loss: Set a stop-loss slightly below $63,500 to manage risk in case of further breakdown.

  • Target: $68,000, aiming for a potential retracement back to the resistance zone.

Risk Management

Considering Bitcoin's inherent volatility, risk management is crucial. Limiting exposure to 1-2% of the trading capital per trade is advised. Adjust position sizing accordingly, and adhere to predefined stop-loss levels.

Market Sentiment

The broader market sentiment remains cautious, especially given recent regulatory developments and macroeconomic factors that can influence price action. Traders should keep an eye on global market cues, as any significant news or market catalysts could drastically impact Bitcoin's price trajectory.

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