 $2.5 billion in overleveraged positions were liquidated on Friday, which of course played a massive part of the flash crash that we saw all the way down to $42,000. More than half of that happened within a one hour period. These type of events happen very often in the crypto market, and this is exactly why we preach so often about risk management. So for those of you who survived this massive 26.5% drop on Friday and for those who did not panic sell, and of course about the dip, I'll be going over the charts today and analyzing some different scenarios that we could possibly see this coming week, both bullish and bearish so that we are so that we are all prepared no matter what happens. Then of course, we will also go over some possible trade setups, some trade ideas that we will be watching this week to try to take either some long positions or some short positions and make some extra profits. So let's go ahead and dive into today's video. Hey, what's up Jay here and welcome to Bitcoin Daily bringing you guys the best tips, tutorials and ideas to help you guys become profitable and successful investors. The goal of this channel is to empower you the community with the knowledge and resources to help you get your wealth up to that next level. So if you guys are new to the channel, don't forget to subscribe, turn on those notifications. If you guys like this video, smash that like button. And if you have questions about anything that we covered today, don't forget to drop it in the comments. So if we pull up the weekly chart here, you guys can see that we did break down below the channel that we were trading. And remember, we're trading within this channel for the last few months. We were stuck here on the bottom of the channel and we're trying to get that bounce to the upside. So that upside bounce would have gave us what could have potentially been, you know, a target of remember we're talking about between 85 to $88,000 for that target up here and of your target. But because we broke down below this channel, that now kind of changes things, of course. So does this mean that we're now in a bear market? Has the bear market begun? Is this the end of the bull run? Right now it's still hard to say. You don't want to make any decisions based on something like that or flash crash. Obviously, it's one of the biggest drops we've had since it is the biggest drop we've had since back in May. This was a 26% drop guys, but the prices did push back up and it ended being around a 13% candle is where it closed at 13% drop on the candle, right? So now I mean, where do we go from here is, are we going to bounce back up now a V bounce V recovery, which basically what that means is a V literally what it says, which would just mean I'm bounced right back up and we just continue like if nothing ever happened, that would be amazing. That's basically what happened during the pandemic, right? And if you zoom out to what happened back in May, it's kind of a V. Now it was it was more like a U because we consolidated for a while and then continued up. But depending how you draw your V, you could have just kind of done something like this. And it's basically a V recovery. However, usually V recoveries, they don't have all this consolidation in it. So this one was more like a U, I would say. Now, are we going to get the V recovery here? There's no way to know, right? So we just have to kind of play it day by day, let the dust settle, there's still going to be a lot of fear in the market due to this massive crash. If we pull up the fear and greed index here, you can see that we're at 16, which is extreme fear. This is the lowest that we've been since back when we had the May crash, right? So you see here May 24, we were at 10 and that was the lowest I believe that we got right now. We're currently sitting at 16. So it's extreme fear. It's potentially a buying opportunity. You can see here that extreme fear can be a sign that investors are too worried that could be a buying opportunity. You can see that when investors are too greedy, that means that the markets do for a correction and the fear and greed index said that we're at extreme greed, which was an 84 back on November 9th. If we look back to November 9th, you can see that this is actually when this correction started, right? November 9th was this candle right here ever since we've had three red candles in a row, three red weeks in a row. Remember, we had a bearish divergence on the charts during that time. We spoke about it even though it was Moon, November, we said, guys, there's also a bearish divergence and we said what happened. We showed you guys exactly what happened last time, that we had the same type of pattern, the same type of divergence. And so we knew we were due for a correction. But now looking at the RSI, you can see that we're getting to the oversold territory. So this means that sellers are getting exhausted. It's starting to exhaust at this point because we've been trending down for since October 20th. So for over a month, we've been on this trend. However, there still is a trend here. So we need to see and we want to see a break. We want to see this bounce and break above this trend line, this resistance line on the RSI. And that's going to basically show us that the bulls are back in control. And we should see at that point the RSI head back to the top. Now if the RSI heads back to the top, obviously that also takes prices up. So with that, then you can expect prices to bounce back up. Now when price is over exhausted, it doesn't always mean that the bounce is going to happen right away. It's the same thing as a bearish divergence. When there's bearish divergence on the chart, it means that there's a correction eventually coming, right? Let's look at the other side of it. Back in October, you saw that we were overbought, which is the opposite of of course, oversold. So what happened at that point? Did that mean that the correction happened instantly? No, we consolidated for a bit and then we set up a new all-time high. So we were oversold, right? RSI started dropping down, but we still, and you can see here, we still went back up and setting new all-time high beyond this price. So at that point is when we pointed out this bearish divergence where the prices were setting newer highs, but the RSI was not. That's always a sign of a correction. It eventually ended up happening. You can see as soon as that happened, prices started falling, you know, and there's no way to expect prices to drop this hard, like we saw on Friday, right? Flash crash. Why do flash crashes happen? It's usually because of overconfidence and overleveraged traders. This is why we tell you guys risk management, risk management, risk management. If you guys do not manage your risk properly and you start gambling, if you get overconfident, then what happens with that? So if you're overconfident on their trades and in your biased opinion on where the price is going, you start to use more leverage, right? Little by little, you'll start using more leverage. So if you're using 10x before, maybe you'll up it to 25, 50x, right? Then if you hit a couple wins, you're like, you know what? I should also make my positions bigger. So now instead of risking one to two percent, you start risking maybe four or five, maybe even break the five percent rule that I always talk about and start risking 10% of your portfolio. Then let's say you lose a few trades, you stop out. So what happens? You start getting in that revenge mode, right? You start to revenge trade. So now instead of trading by your rules and with logic, you start trading with emotion and with greed. So you stop following your rules and you begin to either not put a stop loss at all or you're dropping your stop loss really far away. So now your losses become even bigger losses, right? So now the next time you're like, I'm not going to use another stop loss. I'm going to just dollar cost average down. Dollar cost averaging down is not an issue. Dollar cost averaging down without a plan and without a stop is because yeah, you can dollar cost average, but what happens when you dollar cost average and the price drops 26% percent? You're not prepared for that because you didn't have a plan. So this is how traders take huge losses and get liquidated from their positions. So when a liquidation event happens, like it happened on Friday, this is what that looks like. Just huge drops, right? Because the issue is here, this is what's called a long squeeze. There's so many traders that were long and once there was a big push to the downside, that first it triggers all the long traders that are using stop losses. So they all get stopped out. So let's say this candle right here was the actual money that was moving and that caused the long squeeze, right? That move there stopped out a lot of traders. So when a lot of traders started getting stopped out, then we get a candle like this, right? That's all traders that are using stop losses that are getting stopped out of their positions. So now after that happens, traders that are not using their stop losses begin to get liquidated, right? Little by little, one by one. At first it may not be a lot, but it slowly starts growing as they get stopped. Those that are trying to dollar cost average get stopped or liquidated and those with weak hands start selling. They start panic selling because prices are dropping. So as that pushes the price further down, everybody else gets liquidated and that's when you see something like that where over $2 billion in liquidations happen. Guys, $2 billion in one hour. That's what that candle there was. I posted it on my Instagram here. You can see 1.36 billion got liquidated in one hour, 1.49 in four hours and in the 24 hour period, $2.33 billion worth of leveraged traders were liquidated. That amounts to 376,000 traders and the largest liquidation order happened on Bitfinex for $27.74 million. Guys, somebody lost $27.74 million. That's just sad and it's crazy. That money is gone. So now that leaves us with this, right? Now the dust needs to settle and we're trying to figure out what happens next. So if you just look at the pattern, what's been going on, you'll see that the rest of the weekend it was just everybody was very, very afraid to do anything and price barely moved. You can see that it's actually making a pattern here, which is basically a symmetrical triangle. So this is now starting to show up on the four hour chart. If you zoomed into the one hour chart, you'll see that we had actually broke down from the symmetrical triangle that I spoke about yesterday. I posted on my Instagram, but we kind of jumped back into it, but we're still facing this resistance. Look at this resistance right here. So we need a clean break above that. And basically that number would be somewhere, I would say it's close enough to 50 K to call it 50 K. If we can get a clean break there, then we could potentially expect a move that looks something like this with a target of around $52,000, which lines up perfectly with one of our Fibonacci levels there at that $52,000 area. But if we cannot break out of there, then that's going to give us a breakdown, which then could possibly drop us something like this. It'll be about another 6% drop or so. And that kind of puts us around that $45,000 range, right? And of course, if that can hold, and I believe if we do break down, I don't think 45 is going to hold at that point, I think we slowly grind back down to the low here of the crash. Now, why do I think that? Well, history tells us that's what usually happens, right? Remember, we always look back on history. Last time we had a crash of that magnitude, you can see that we literally hit the bottom on that first day of the crash. Then we bounce back up and look how we slowly just kind of consolidated here, testing this bottom part one, two, three times, and even a fourth time here, right? So about four times, we retested the bottom of the flash crash before we eventually took off and started a new uptrend. And if you take a look at how long this consolidation period lasted before we started our new move up, it took about two months, 63 days in consolidation before we finally started a new impulse move to the upside. So if we put the same amount of time that it took last time before we got a bounce back up, that gives us a date around February, the beginning of February before we can expect a move back to the upside. Now, am I saying that's going to happen or if it's going to take two months before we can see another move up? That's not what I'm saying. What I'm saying, I'm showing you guys what happened last time, because history doesn't always repeat, but it often rhymes. So I always like to look back in history in the last time that it happened and kind of get an idea of that so we can make better decisions going forward, regardless of the scenario that approaches. So how do we get out of this mess that we're in? Well, the first step is we need to break out and break above $50,000. We're currently sitting literally right below $50,000 and we've been sitting there for a little bit already. We have not been able to break above it. And you can see here, if we fix our lines here to what the price is currently doing, what it's done the last few hours, it gives us this movement right here where we're sitting literally at the apex of the triangle, right? So this is literally telling us that a decision has to happen here. We need a move, whether it be a move up or move down, something is going to eventually happen, depending which way it breaks is what our price target will be. So if we cannot get above that $50,000 range, then we're probably going to be looking at this bear flag that's going on right now and see and that will probably end up playing out. That will give us this target down here of around $45,000. But again, like I told you guys earlier, I think that if we do break down, we will probably go lower than that. We might probably once again test the bottom of this flash crash and hit $42,000 again before continuing up. So if we were to hit that, that's about a 15% drop from where we currently are right now versus the 6% drop that a breakdown based on this symmetrical triangle here is giving us. Now I also do believe that if we were to get a breakout to the upside, we would probably go beyond this target as well. On the way back up, our resistances are going to be at $52,053. On the way up, the resistances would be $52,000, $54,056. And of course the upper side, which is like $58,000 and $60,000. But that's not really what we're worried about right now. Our focus is solely on getting back above $50,000 and $52,000. If we can get back above there, I believe that we can put together a rally here towards the end of the year and possibly push up, maybe not set new all-time highs, but at least get back to that $60,000 range. If we cannot get above $50,000, then of course we're going to just grind down. And I think we will probably end up testing $42,000 again. You can see here that that level, I highlighted it in green because it is a support level. That's a big support area. That's back when we had our, remember another previous all-time high was there. After that, we used that as support many times. Here when we lost the level is when we had the huge drop down here and we had lots of trouble getting back up. You can see how many times we got rejected before finally breaking back above. When we did break above, you'll see here we were able to use it as support, had support there once again, which then gave us the lift off to continue our rally to the upside and set new all-time highs. So if this ends up playing out like last time, I think that instead of us dropping all the way down here, this time the bottom would be down here at that $42,000 range. That's the bottom of the flash crash. The same way that in May, the bottom of the flash crash was at that $30,000 to $28,000 range. I think that our bottom range here during this correction and pullback is at $42,000 to $40,000 range. I think if we lose that, if we were to fall below that, then we can start considering that we're no longer in a bull market and we could possibly be retesting these lower levels down here. That would start being at like at 38 to 36. If we were to lose that, then we're definitely testing the bottom over here, which is at 30 to $28,000 range again. That could probably be several months of that yet again, more than two months I think this time around. We could see maybe all of 2022 us just kind of struggling in that range below $42,000 if we were to lose it. So $42,000 is a very important level. If we lose $42,000, I'm looking to get into short positions and try to make some money in that aspect, build up some more Bitcoin, and of course, reevaluate at that point. So trade setups that I will be watching here, I'm going to keep it simple, guys. I'm looking for a break above 50 and a break down below the low of the day. So the low of the day right now is sitting at 47 to 41. So I'm looking for a breakout above $50,000, which we're right really close, or I'm looking for a break down below the low of the day. That's at 47 to 41. So if you want, you can play, let's say you can open a short position below 47,000, that'll probably take you down to at least 45. You could potentially see 42. So it would be a profitable trade. Another idea is shorting here as close to 50,000 as possible and then using a stop loss at 50. So you would do in that scenario is you can open a trade here and if you broke out above 50,000, then you're going to flip your trade. You're going to close out your short trade, open up a long trade in the opposite direction. That's how you play both sides of the fence. That is pretty much it for us today, guys. I hope you guys had a safe weekend and you were able to survive it. And hopefully we have a better week this week. Let's see what happens this week. This is our first official full December week. Let's see if we can get that Santa rally. I was reading something that usually between the 15th and the 19th is when we see the biggest rallies in Bitcoin. So we're going to be pulling for something like that. We'll talk about that more on Friday. So let's see what we get this week, guys. Again, thank you guys so much for watching this video. If you guys are new to the channel, don't forget to subscribe and turn on, of course, your notifications. If you enjoyed this video, please guys smash that like button for us. Let's get this video to 100 likes. We didn't hit on the last one. Last one, I think we got to like 80 likes. I think this one we can definitely get to 100. And of course, if you guys have any other questions, just drop it in the comments. I'm always happy to answer those for you guys. Thank you guys so much. I will see you on the next video. As always, peace and love.