68 Trading Plan (02/06 – 02/12/2023) – Will BTC Enter a Correction?

After a robust 40% rally in January 2023, is it time for Bitcoin (BTC) to enter a correction phase? Let's dive into the technical analysis for the crypto market for the upcoming week with 68 Trading!

Review of Last Week's Trading Plan

Review: 68 Trading Plan (01/30 – 02/05/2023) – Beware of Fed Rate Decisions

Last week, 68 Trading successfully took profit by anticipating BTC's sideways movement and a decrease in BTC Dominance (BTC.D). We capitalized on numerous trades, including both spot and futures.

ROI from Trades Called on Telegram in January 2023:

With the market's explosive growth over the past month, what's next? Should we enter positions now? Let's explore this week's plan!

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Analysis and Outlook for Bitcoin (BTC) Next Week

Weekly Chart of BTC/USDT on Binance Futures, screenshot from TradingView as of February 5, 2023

This might be the first red candle for BTC after four consecutive weeks of green weekly candles. As noted in last week's plan, BTC is approaching a critical resistance zone at $24,000 – $25,000, where momentum may temporarily stall. Indeed, BTC has struggled to break through this resistance, showing signs of weakness and subsequently moving sideways.

Daily Chart of BTC/USDT on Binance Futures, screenshot from TradingView as of February 5, 2023

The sideways range we identified two weeks ago ($22,600 – $23,700) remains intact. Despite two attempts to break out, these were false breakouts => Buying pressure at this price level is relatively weak.

This is understandable given that BTC has surged significantly without a correction. Altcoins have also doubled or tripled from their lows — or more. On top of that, the macro environment remains lukewarm toward crypto => Many still question whether this rally is just a dead-cat bounce => Avoid FOMO buying at any price.

6-Hour Chart of BTC/USDT on Binance Futures, screenshot from TradingView as of February 5, 2023

The 6-hour chart reveals a divergence across four cycles, indicating a high probability of a correction. Note: A correction does not necessarily imply a trend reversal.

I expect BTC to correct to the $20,500 – $21,000 range (aligning with the EMA200). However, we will only see this if the price breaks down from the gray zone ($22,400) and successfully retests this breakout.

4-Hour Chart of BTC/USDT on Binance Futures, screenshot from TradingView as of February 5, 2023

If the price respects the support zone ($22,400), BTC will likely continue to move sideways within this range.

In my view, neither scenario presents a particularly compelling setup for trading BTC right now. Consider sitting BTC out and focusing on altcoin trades for potentially better returns.

BTC.D (Bitcoin Dominance)

Chart of Bitcoin's Market Cap Ratio vs. Total Crypto Market Cap (Bitcoin Dominance), screenshot from TradingView as of February 5, 2023

Last week I called for a drop in BTC.D, and it did fall sharply as shown. This week, I expect BTC.D to either continue moving sideways or decline further — either outcome would be favorable for altcoin pumps.

Some Altcoin Setups

AVAX is consolidating after breaking out of an accumulation triangle. Consider buying at the support area confluence with the trendline (price range $18 – $19) if price revisits and holds that zone. This setup is invalidated if price breaks below the support + trendline.

4-Hour Chart of AVAX/USDT on Binance Futures, screenshot from TradingView as of February 5, 2023

Also, if you're holding DOGE, check out my detailed analysis on the 68 Trading Twitter:

Macroeconomic News

Last week, on February 2, 2023, the Fed announced a 0.25% rate hike. While rate hikes are ongoing, the pace has slowed considerably compared to 2022 — a tailwind for crypto that helped fuel the recent surge.

That said, we need to keep a close eye on the Fed. On February 8, 2023, at 4 AM, Fed Chairman Jerome Powell will deliver a speech on the Fed's forward policy path. Pay close attention to this speech for a long-term macro perspective.

Additionally, on February 9, 2023, at 8:30 PM, the US will release initial jobless claims data, which is forecasted to come in higher than the prior reading.

Conclusion

The above outlines my personal trading plan. I hope it gives you additional perspective for making better trading decisions in the week ahead. See you in the next update.

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