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Further Downside for Bitcoin Followed by Massive Upside: An In-Depth Analysis

As mentioned in my previous post, I'm currently in a short trade, and I expect further downside for the time being. Consequently, I'll keep this trade open while targeting the levels discussed below in detail.

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Presently, Bitcoin trades at the 27,415 level, having broken and closed below the ascending trendline highlighted in the 4-hour chart below.

Following the trendline break, I've added a 1 to 1 extension, extending from the anchor high above the trendline to the actual break. This yields a target of 25,011. The image below illustrates this extension and my current open short trade from 27,876.

The trendline break offers a potential target, but I'm also paying close attention to other key levels. Let's examine them one by one.

  1. Liquidity level: The March 27th swing low at 26,505 could prove pivotal. A break of this level may attract new shorts, with the potential for traders to get caught on the wrong side. Watch for a break of this level followed by an immediate close back above it, as this could signal a turning point for significant upside. See the chart below:
  1. Weekly nPOC: At 24,855, slightly below the 1 to 1 extension of the ascending trendline, we find a weekly naked point of control. If we continue downward from the liquidity level, the weekly nPOC should take precedence over the 1 to 1 extension, although their proximity makes this a minor concern. As volume attracts price, this level is another crucial zone to monitor.
  1. 21 Weekly EMA: The 21 weekly EMA, currently at 25,389 (though subject to fluctuation), often acts as a robust support level during strong uptrends. We may see the price break through this level and then retrace back above it. This level serves more as an indication of a potential price bounce rather than an entry point.

Daily Level: Finally, we have a daily level at 24,366, which I consider my last possible turning point. A break and close below this level will prompt me to reevaluate my current upside bias.

Trade Plan

I've compiled all details into a single 4-hour chart below (click the image for a full screen).

The liquidity level (1) is crucial for me and will be the primary focus. A break of that level followed by a close back above it will be a possible entry point for a long trade.

The 21 weekly EMA serves more as a zone I'd like to see the price remain above to maintain my bullish bias.

The 1 to 1 extension, along with the weekly naked point of control, is another area where I'll consider a long trade. Ideally, I'd like to see a sharp move down to this level followed by an immediate, strong reaction to the upside.

As always, I'll set my stop losses immediately upon entry.

To be continued...