Opposite to what we expected in our previous analysis, Bitcoin has not attempted to extend its bearish momentum, at least in the last 24 hours. The BTC/USD yesterday established an intraday low at 6856-fiat, which also acted as a support to a bullish correction phase. As a result, the pair has recorded around 2% gains at the time of this writing.
After the BTC/USD slumped below 7000-fiat, we were waiting for the pair to attempt a breakout above the said psychological resistance, before we put a long position towards the interim resistance at 7147-fiat. And thanks to the minor upside, we were able to achieve the targets today.
In medium-term, the BTC/USD is still locked inside a descending channel. The pair is now near its potential deflection point, while a break above it will confirm an extending bearish correction. The fact that the 100H MA is also above 200H MA is also enough to assume a potential upside breakout. However, a narrow gap between the two moving indicators points to a sluggish bullish momentum.
The BTC/USD, in the meantime, is trending below its 100H and 200H MA, with the pair close to jumping above the 200H MA in event of an extended upside move. Both the RSI and Stochastic indicators have moved north after spending time in their oversold areas, signaling the absence of selling positions.
Overall, the Bitcoin market conditions have improved. But the medium-term bias continues to be bearish.
We have just closed our long position towards 7147-fiat on a decent profit. As of now, we are waiting for the price to attempt a breakout, which automatically influences us to put our breakout strategy in place before anything else. That said, if the price manages to cross above 7147-fiat, our interim resistance for a very long time, then it would have us put a long position towards 7275-fiat, our primary upside target. A further break above the upside target would clear our position towards the 38.2 Fibonacci retracement level at 7469-fiat.
Not to forget, that our stop loss during the long positions will always be 2-pips below the entry point.
Looking the other way around – we also expect a pullback from the resistance of the prevailing descending channel. Should it happen, it naturally influences to switch to intrarange strategy. That being said, a pullback from 7147-fiat would have us put a short position towards 7000-fiat, our psychological support at this moment. A further break, and we’ll look to retest 6856-fiat as the new interim support. A stop loss a two-pips above the entry point will protect us from potential bias boomerangs.
Featured image from Shutterstock. Charts from TradingView.