The bitcoin price on Friday expects to close the week on another drop as it slows its upside correction following yesterday's $400 plunge. The BTC/USD rate is now trading at 4283-fiat, up 4.8-percent from its intraday low. The upside action is taking place as volume…
The bitcoin price on Friday expects to close the week on another drop as it slows its upside correction following yesterday’s $400 plunge.
The BTC/USD rate is now trading at 4283-fiat, up 4.8-percent from its intraday low. The upside action is taking place as volume drops. It means that traders are showing no support to the move up, and the BTC/USD rate should fall. From a technical point of view, the pair is forming what traders call a bearish pennant. It means that traders are shorting their positions after the latest drop, leading BTC/USD to make lower highs and higher lows. Overall, the consolidation should meet a downside action.
Meanwhile, the US dollar expects to lose some of its yearly gains as Brexit comes closer to a fair deal. The draft declaration agreed upon by both the United Kingdom and the European Union has created a positive atmosphere for traders, meaning that the greenback could correct lower by as much as 10 percent. The global impact of a weak dollar will be seen across its quoted assets, one of them being bitcoin, which is attempting to locate a bottom after two weeks of constant bearish action.
As of now, the shorts in BTC/USD are targeting the lower trendline of the triangular pennant which, if broken, could lead a drop towards 4000-fiat. A bounce back from that trendline, meanwhile, will open a good long opportunity towards resistance. If volume begins to drop near it, be prepared for a dump.
Technically, on the daily chart, the RSI has extended its stay inside the oversold area and the Stochastic Oscillator is hinting at a similar action. The BTC/USD index, meanwhile, is trending inside a giant falling wedge, as discussed in CCN’s previous analysis. A medium-term bullish correction could create long opportunities towards the intermediary target near 4500-fiat, leading to a full-blown recovery towards the wedge resistance, ensuring a breakout scenario towards the 200-period moving average.
The range we are watching today is defined by 4254-fiat as interim support and 4298-fiat as interim resistance. We are already in a position to apply our breakout strategy. Therefore, we are starting by opening a short position towards 4171-fiat while maintaining our stop-loss level just 3-pips above the entry point.
In the event of a bounce back, we would enter a quick long position towards 4298-fiat to reserve minimum profits. As we do, a stop loss around 4250-fiat would minimize our losses should the bias reverse.
An extended upside, at the same time, will have us put another long position, but this time towards 4341-fiat. A stop loss just 3-pips below the entry point will define our risk management perspective.
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Last modified: January 24, 2020 10:54 PM UTC