Today, bitcoin followed through with another close lower—a close below the 100DMA, $60K, and the previous range.

So the natural next question is: If it doesn’t regain $60K…

How low can it go?

Jesse showed his target boxes to the downside in this tweet:

The truth is that no one knows how much it will go down, but let’s talk through a few different methods that people use to try to figure it out.

1. RSI

The first thing we look at to see when price might be bottoming is RSI.

Look for Bullish divergence + Higher low

The easiest to spot will be if RSI makes a bullish divergence—i.e., price makes a lower low while RSI makes a higher low.

If we see that, we start looking for RSI to put in a higher low and price to put in a higher low

The more powerful move to the downside or upside, the more likely we are to get bullish divergence.

In this case, we’re getting a high time frame reversal, so it’s more likely we will end up seeing bullish divergence before a reversal.

What if we don’t get divergence?

In some weaker moves to the downside, we don’t get divergence to prepare us for trend reversal, like this move back in January.

In that case, we have to look for RSI breaking above the trendline and the 50, along with price.

Flip to higher time frames to spot trend changes

When RSI starts getting this low on the daily, it can be tempting to think the bottom is getting closer.

The best thing to do in this case it to flip to a higher timeframe.

For instance, if we flip to the 3D, we see that RSI is setting new lows and it’s below the trendline.

One strategy is to wait until the 3D RSI breaks that downtrend before getting back in.

For instance, using the 3D RSI would’ve gotten you into the last move at $45K and out of it at $67.7K for a 49% gain.

2. Price targets

We look to price targets as a way to prepare ourselves for when the trend reversal might start.

There are a bunch of ways to identify price targets.

Moving averages

There are a few very popular high time frame moving averages: 100 day, 200 day, and 200 week.

Now that price has decisively broken the 100 day moving average, we look to the 200 day for support next at $49K.

The 200 week moving average is much lower at $34K, and moves up more slowly. Assets like $MATIC have already moved back to it’s 200WMA.

We don’t know which moving average it’ll move back to exactly, but we’ll look for trend reversals as it hits these levels.

Fibonacci levels

For any retrace, price will often revisit fibonacci levels (aka “fib levels”).

These measure what % of the move that price is retracing.

For instance if price went from $50 to $100, then a 50% retrace would come back to $75.

For the most recent move:

• 50% level is $53.3K

• 61.8% level is $49K

• 78.6% level is $44K

Once again, we don’t know which level price will revisit, but can look to those levels for potential reversals.

If you thought this was a bigger retrace, then you might take those fibonacci levels all the way from the bottom from Sep 2023.

Here the levels to watch would be:

• 38.2% at $49K

• 50% at $43K

• 61.8% at $38K

There’s no right or wrong pivot points to take your fibs and look at a few different once can give confluence to an area.

Volume Profile

Another way is to take a volume profile. Areas where volume has been traded in the past can act as support when price is falling.

Few things to note on this chart:

1. Blue lines: Volume area high ($67K) and low ($33K) mark where 70% of traffic in the range is traded.

2. Red line: Point of Control is where the most volume has been traded ($43K)

3. And then we can see a small volume spike around $50K.

Price has lost the range above and seems to be heading toward the point of control.

Anchored VWAP

We can also pull the VWAP from the 2023 move, which gives you the volume-weighted average price (yellow line)

The VWAP tool will also give you 1 standard-deviation above VWAP (green line), 2 std dev above (blue), 1 std dev below (pink), and 2 std dev below (lower blue).

We can see that price has decisively lost the green VWAP and is headed toward the yellow.

Here’s where you can find the Anchored VWAP and Fixed Volume Profile on TradingView.

Liquidation Maps

Lastly, you can use liquidation maps, which show you where people place their stop losses (highlighted in green).

Price tends to like to go toward areas with a lot of liquidity, highlighted in green.

By this metric, we can see a lot of liquidity below $50K and above $73K.

Summary

Bitcoin has now lost its range and its trending down, unless it can regain the range quickly with closes above $61K

The next most likely stop would be around $50K, where the 200DMA, VWAP, 50% retracement, and liquidation levels sit.

We don’t truly know how low it’ll go, but we’ll watch RSI to see if there’s a reversal at the different levels.

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Disclaimer

The contents of this newsletter are expressed in my opinion only, none of which is financial advice. Always do your own research as this information is intended for educational & entertainment purposes only.