Bitcoin on Monday pursued a fake upside action across several exchanges, mainly BitFinex, after stablecoin Tether (USDT) started falling.
The BTC/USD responded to the upside action witnessed in the BTC/USDT market. USDT traders started exiting their positions amidst growing concerns about BitFinex’s insolvency and its impact on the coin’s liquidity. The more traders swapped USDT for other coins, the larger it dropped, eventually founding support near 85 cents. By that time, Bitcoin had established its upside just shy of $8,000 on BitFinex only – so as other top coins which recorded massive gains.
So far, Bitcoin has corrected towards $6,346. But indeed, the latest price action has messed up the technical outlook.
The Coinbase chart indicates that BTC/USD is struggling to find support near its 50H moving average for a potential reversal. If it drops below the pink curve, the pair will enter into a near-term bearish bias, which is further supported by the RSI indicator, which is on the verge of inflection, and the Stochastic oscillator which could continue its drop into the selling region at the same time.
There is a near-term bullish trendline that could provide support if price extends its bearish correction action while keeping the 6000-fiat bottom in sight. A reversal at any point from now could also indicate a smooth upside run towards the near-term bearish trendline above as a potential long target.
Overall, the BTC/USD is below its key 100 and 200h moving averages and the RSI and the Stochastic are heading into bearish regions, combinedly indicating a near-term selling sentiment in the market.
According to our intraday analysis, we are first restricting our range by appointing 6370-fiat as our interim support and 6450-fiat as our interim resistance level. The price action, which is already going downwards, has allowed us to enter a short towards our immediate downside target near 6290-fiat. Our stop loss in this scenario is maintained two-pips above the entry position.
A bounce back from support level is also in sight. If it happens, our first instinct would be to enter a long position towards 6450-fiat while maintaining a stop loss just around 6360-fiat to reduce our overall risks. A breakout above 6450-fiat and we’ll enter another long, this time towards 6550-fiat while keeping our stop loss just 3-pips below the entry position.
Meanwhile, it is recommended to watch out Tether updates as you trade Bitcoin.
Featured Image from Shutterstock. Charts from TradingView.