The bitcoin-to-dollar exchange rate started losing its grip on the sideways action, slipping almost a percent this Friday.
The pair broke below 6400-fiat, the psychological support level of the previous trend, to establish new intraday lows towards 6356-fiat. The downside action appeared after bulls began to feel weak near the giant descending trendline formation that has capped every upside seen in every quarter of this year. The upside and downside sentiment, however, was in equilibrium as confirmed by majorly accurate Doji formations in the past two days. It seems traders decided to close their long positions on minor losses in fears of an imminent short sentiment.
The BTC/USD pair is hinting a major reversal towards the support area lingering near 6000-fiat should the pullback action extends itself. A breakout at this point in time could result in yet another false breakout scenario at most, as can be seen in the previous upside actions. The pair is now testing new medium-term support sentiment near 6320-fiat, its September 20 low, where one could expect upside corrections towards the upper trendline of the giant descending triangle.
As of now, BTC/USD is still well below it’s 100 and 200H simple moving averages while the RSI indicator and the Stochastic oscillator both are hinting a run towards their respective oversold areas. On a daily chart, the bitcoin market is in a near-term bearish bias.
The recent downside action has brought us inside a new trading range, defined by 6353-fiat as our interim support and 6415-fiat as our interim resistance. We are first waiting for BTC/USD to test 6415, and a close above the level will have us open a breakout long position towards 6478-fiat, coinciding with 61.8 percent Fibonacci level of the last swing from 6150-lows and 6680-high. On this position, we will place a stop loss order just 3-pips below the entry point to minimize our losses should the trend reverse.
A pullback from resistance, meanwhile, will have us open a short position towards 6353-fiat. Similarly, a bounce back from 5353-fiat will have place a long position towards 6353-fiat, which is our intrarange strategy in case the pair is in a mood to consolidate sideways.
A breakdown action below 6353-fiat, however, will have us open a short position towards 6320-fiat, a strong support level from September 25, as our primary downside target. We could see some bullish entries here which would us allow us to open some long positions towards the next possible upside target, 6400-fiat perhaps. Anyway, placing a stop loss just 4-pips below the entry position anytime would protect us from any surprise reversals.
Featured Image from Shutterstock. Charts from TradingView.
Last modified: May 20, 2020 3:43 PM