Bitcoin price on Thursday escaped its prevailing downtrend and appreciated close to 3 percent against the US Dollar.
The BTC/USD started the day in support of the late-night breakout action from Wednesday, in which the pair broke above the symmetric triangle resistance – what could have been a bear pennant if the price had continued to its downtrend. Therefore, the price continued to form high highs during the Asian trading session, a sentiment that rippled through the entire European trading day. Overall, BTC/USD managed to retest the very psychological resistance sentiment near 6500-fiat. It once even broke above the level to form higher highs towards 6528-fiat.
The BTC/USD rally seems like a good news for day traders, but in long-term, the bearish bias is far from over. The uptrend is still capped by a descending trendline. It means BTC/USD could still restest 7000-fiat area but only a breakout above the trendline could confirm a medium-term bull bias. In near-term, however, the Bitcoin market is showing a neutral-to-buying sentiment. BTC/USD is trading below its 100H and 200H MA on a 4H chart, but it has crossed above its 50H MA. The RSI and Stochastic indicators have also entered their respective overbought areas, indicating a potential downside correction anytime.
In a smaller timeframe chart, we can see BTC/USD inside an ascending parallel channel, providing speculators potential entry and exit positions to play throughout the day. Meanwhile, we are particularly focused on our breakout positions. The range we are watching today has 6528-fiat as our interim resistance and 6434-fiat as interim support.
We are first waiting for BTC/USD to retest the resistance level to give us two potential scenarios: a breakout and a pullback. In case the pair crosses above the resistance line, it would have us put a long position towards 6645-fiat, our potential upside target from August 10 and 15. In this position, a stop loss four-pips below the entry point will define our risk management perspective.
In the event of a pullback from resistance, we’ll put a short towards our current support near 6434-fiat while keeping our stop loss two-pips above the entry level to protect our positions in case the trend reverses. The next positions would arise upon achieving the short target towards 6434-fiat. On a bounce back from it, we’ll put a long towards 6528-fiat. On a breakout, however, another short position towards 6391-fiat would make sense.
Featured image from Shutterstock. Charts from TradingView.