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Bitcoin traders have no choice but to use technical analysis: veteran trader

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JC Parets, CMT, Founder & Chief Strategist at allstarcharts.com, joins Yahoo finance's Jared Blikre in a Yahoo Finance Premium webinar to chart the latest market moves in bitcoin. Not a subscriber? Start your free trial to join future webinars live!

Video Transcript

JC PARETS: As far as cryptocurrencies, I don't know if you've noticed, but the trend is up, right? I mean, that-- that is quite obvious.

- I noticed that.

JC PARETS: I think, 47,000 is next. Where's Bitcoin now? Bitcoin's sitting right around 36,000, right? So we're pretty much in between. I think the floor has been 30,000. I think that's still the case. Ceiling for right now is 45. That's the next target.

If it's below 30, I think then it's in trouble. And then there's a lot more risk, in my opinion, if you see Bitcoin below 30. Above 30, and I think that that's-- that's a respectable level. And 45 is next, 45 to 47, something like that, based on our mouth.

- Yeah. And just real quickly, I know you-- this-- I think this is kind of how you tend to see the market with these levels that just evolve by the price action that you see in candlestick charts. But you also use Fibonacci extensions. What other tools do you use to help you view the market? And just for the audience, there's no one right answer. You have to do what works for you. But I'm asking you, JC, how are you seeing things here?

JC PARETS: Yeah, you know, there's never been an asset in-- in history that-- where you have no-- there's no fundamentals like this, right? There's no-- there's not a company. There's no earnings. It's just a "fu-gay-zee," "fu-gah-zee," right? It's just like-- it's an idea, right?

So because of that, doesn't mean you can't make money. There's just no fundamentals. So you have no choice but to analyze the behavior of the market and market participants. And that's technical analysis.

As it turns out, boy, oh, boy, does this thing rate. You can really visualize the supply and demand dynamics that are taking place in this. You know, when we got back up to those former highs, it sold off. Like, that resistance was there.

When we broke out above resistance, it shot up. You know, when it came back and retested it, it tested it successfully and went on. Like, this thing, you read-- like, this is, like-- like, stocks don't trade technically so cleanly, and futures even less, and currencies don't even get me started. But when it-- like, this is, like, chapter one of, like, technical analysis kindergarten class.

Like, this is, like, going back to the basics helps unbelievably in-- in cryptocurrencies, more so than any other asset class. And I do this all day. I rip through 5,000 charts a week. So I'm telling you.

- Well, I know your favorite time is the end of the month here, when you get those monthly candlestick bars. I just want to point out in Bitcoin in that chart we had up during the 27% decline, which means nothing for Bitcoin, it had, I think, at least four 80% to 90% drawdowns. I'm not sure we're going to see that again, given the institutional participate-- "participata--" "participita--" participation, whatever that is. But you-- you got to be able to withstand the volatility. And if you're trading in the futures market with leverage, good luck. That's why I don't rate it in the futures market.