The problem with the daily chart is the significant drop. At this point, several things can happen right away. I personally narrowed down all the options to the 3 most likely ones. Let’s take a look at each of them.
1. Similarity to COVID market drop
This whole plunge had several similarities to the COVID one. If the same situation from last March were to repeat, it would look something like this. In essence, it would lead to a quick rise of Bitcoin again, followed by consolidation under the current top, and then another jump upwards once again.
2. Horizontal price movement
The second option that is almost always valid is the horizontal price movement. After a big slump, there will be a longer consolidation and a mundane move to the side. This horizontal movement can be in the form of a triangle or in the form of a range. In essence, the price would go sideways for a while, and only then would the chart decide what to do next.
3. ABC upward correction
As a third and last option, I see the ABC correction, which would go to the resistance of $ 46,549 – 49,251 . However, the price would reach this price level also in the first scenario I have mentioned here. The only difference here is that in the first scenario we would stay at this level yet in this one, the price would bounce downwards, turning this price level into a resistance.
These are the three basic scenarios that we should be working with in the medium term. It is highly probable that one of these scenarios will be correct. But what would I recommend? Currently, it is best to focus on 4H and 1H charts. It is ideal to watch the nearest movement and make short few-hour trades.
I have presented a few charts and scenarios here. These will probably be valid for a few more weeks to come. However, from the trading point of view, we have to move to 4H charts because, at this point, we are unfortunately unable to read longer-term trades from this drop.