The downside pressure renewed in the bitcoin market after two weeks of firm action.
The bitcoin-to-dollar exchange rate on Monday dropped by more than 3 percent, breaking below the critical support level near 6300-fiat. The pair formed intraday lows on a downtrend towards 6212-fiat, only to find a weak bullish sentiment. The price has corrected ever since and is showing signs of weak sideways consolidation. A pennant formation is likely at this moment before BTC/USD continues to its downward action.
The US Dollar Index (DXY) looks bullish at the beginning of Monday’s intraday session. It is set to test highs in the 96.70-region following a weak political scenario in Germany. The country’s chancellor, Angela Merkel, will not renew her position in the next election, which visibly had a role in the Euro’s weak performance against the greenback.
The dismissal performance of the stock market has further intensified the dollar’s credibility as the most substantial asset around. For what it may seem, bitcoin is only a candidate for this ongoing turbulence.
The BTC/USD pair is trading at 6265-fiat upon the upside correction action. The near-term triangle formation stands invalid after the breakdown action. The next moves are taking place in what may seem like a short-term bear trap. The continuity in the downward movement would target 6131-fiat as the next critical support level, owing to its ability to have sustained downsides a couple of times since early September.
Technical indicators have turned from neutral to bearish on four-hour timeframes. BTC/USD is trading much lower than it’s 100 and 200-hour simple moving averages. The momentum indicator RSI has dived inside the oversold region, awaiting comeback. And, the Stochastic Oscillators are also heading below 40, a selling area. Overall, the market is very bearish in near-term.
We are watching a new range today, defined by 6212-fiat as our newfound interim support, and 6384-fiat as our new interim resistance. We are initially looking for a weak sideways consolidation which would not yield any decent intraday opportunities for us. More likely, we will intellectually remain in a short position mood towards 6212-fiat. A rise in volume, thus, would open our first position likewise: a short towards 6212-fiat while maintaining a stop loss target just 3-pips above the entry point.
Any upside action combined with raise in volatility would mean a similar response but to the upside targets. That said, a highly volumed move towards the interim resistance at 6384-fiat would have us open a long position towards the same, while a stop loss just 2-pips below the entry level would define our risks.
Featured Image from Shutterstock. Charts from TradingView.
Last modified: October 29, 2018 20:19 UTC