Disclaimer: I am not a financial advisor and the following article is for educational purposes only. Trading and investing is high risk/reward profession and you should not Trade/invest money that you are not willing to lose.
Monthly Timeframe:
Let’s look into the monthly time frame on BTC,
The monthly chart reveals a strong support level ranging from $19,569 to $23,287, while a strong resistance level is observed at $35,060 and $48,234. Presently, the price is situated within the range of the support and resistance levels. Therefore, in the monthly time frame, there are no apparent low-risk trade opportunities at the moment.
To explore potential trade opportunities, let us shift our focus to the weekly time frame and analyze the price action.
Weekly Timeframe:
Upon examining the weekly chart, we observe that the support and resistance levels align with the monthly analysis. However, this time we do identify a low-risk trade opportunity. The green-marked price level indicates the weekly support range, spanning from $24,271 to $19,812. Furthermore, it is evident that there is ample liquidity for the market to hunt on its way back up, as indicated by the red trend line. The proximity of the lower highs suggests a lack of downside momentum. If the market reaches the weekly support level, it could present a suitable entry point for a long position. Nevertheless, while it is a low-risk trade, the risk-to-reward ratio might not be optimal. To explore potential opportunities with a better risk-to-reward ratio, let us proceed to analyze lower time frames.
Daily Timeframe:
Let’s go into daily time frame,
Analyzing the daily time frame, it becomes evident that there is a strong upward momentum in the market, resulting in several gaps that may potentially be filled during retracements. Consequently, although there is an opportunity to initiate a long position at the level of $23,287, it is crucial to set a stop loss at the swing low of $19,569 and that does not give us a good risk to reward trading opportunity. Presently, the best course of action is to exercise patience and await further developments.
Considering the existence of significant gaps, it is plausible that the market could experience a deep retracement. In such a scenario, if the price reaches the level of $21,470, it would present an extremely low-risk trade entry with a high returns. Placing the stop loss at $19,569 and setting the take profit level at $31,000, the trade would offer a favorable risk-to-reward ratio of 1:5.
Overall, it is prudent to wait for potential retracements and monitor the market for a more advantageous entry point with improved risk-to-reward dynamics.
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