Before we begin our analysis, it is important to discuss what had prompted a sudden $500-drop in the Bitcoin market. OKEx, a Hong Kong-based cryptocurrency exchange, recently issued a statement that mentioned one of their customers as the main perpetrator of the latest Bitcoin bear-trap. The OKEx client initiated a relatively large long position which, despite being reviewed and frozen by the exchange, caused havoc at the Bitcoin market.
So, we can assume that someone executed the bear-job single-handedly, and a panic-sell ensued.
The past 24 hours in the BTC/USD market witnessed minor upside corrections. The pair tested 7135-fiat as interim resistance but failed to break above it for too long, eventually slipping back to where it is at the time of this writing. at 6966-fiat. Nevertheless, the BTC/USD is now down over 18% since testing 8512-fiat.
We are now looking at the formation of another bear flag inside an overall ascending channel, indicating a strong bearish pattern in general. The BTC/USD has also slipped below its 50, 100, and 200H moving averages to further intensify the selling pressure. The RSI and Stochastic Oscillator, both, have recovered from their respective oversold areas following the latest knee-jerk bounce back; they are neutral.
Overall, the market is biased towards bears.
As mentioned in our previous analysis, we had opened a long position towards 7135-fiat while expecting a bounce back following the $500-drop. We managed to squeeze out a decent intraday profit out of our position.
Following the pullback, we are back in the same range, defined by 7135-fiat as our interim resistance, and 6809-fiat as our interim support. Both the levels are defined by their respective Fibonacci retracement levels of the last uptrend move from $5,754 low to $8,517 high. At the same time, we had already cleared our intentions to consider 7000-fiat as our intermediate support/resistance level, depending on which direction the BTC/USD is moving towards.
We have now entered a short position towards 6809-fiat while keeping our stop loss a 2-pips above the entry point. Should the downside momentum intensify, we'll be looking out to break below 6809-fiat and put a quick short position towards 6675-fiat. A stop-loss 3-pips above the entry point will define our risk.
Looking the other way, a jump above 700-fiat could reconfirm our trust in an extended consolidation. This would allow us to place another long position towards 7135-fiat, while a stop-loss 2-pips below the entry point will protect us from any sharp pullback (with the possibility of a bear pole formation).
However, in case of extended upside run, we'll first wait to break above the interim resistance before placing another long position. If it happens, 7275-fiat would be our upside target, while the stop loss will remain a 2-pips below the entry point like usual.
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