Bearish bias stayed for dinner, and it now wants to stay the night.
There is no stopping to the prevailing selling sentiment in the Bitcoin market. Over the past one week, after establishing a weekly high at 8512-fiat, the BTC/USD pair has slipped 11.6% already. The price action in the past 24 hours has somewhat remained stable, with the pair dropping to a new intraday low around 7280-fiat, and erasing losses in a follow-up bullish correction.
We have to say that we made a minimal loss today. Upon breaking below 7460-fiat, we were short towards our next primary downside target at 7134-fiat. But, to our surprise, BTC/USD reversed the bias on smaller time frames and reclaimed 7460-fiat as its good-old support. We are glad we had our risk management strategy at a place – a stop loss we had put 3-pips above our entry point. That is the beauty of intraday.
Anyway, it is a new day, and we have new things to add to our previous strategy. So, without further ado, let’s get to the technical analysis first.
Can anyone see that orange PACMAN jaw we have drawn? That’s a bearish pennant. So when we notice a steep, almost-vertical downtrend, consecutively followed by a minor knee-jerk consolidation, then that becomes a bearish pennant pattern. It indicates a bearish bias in the market, as the name suggests, which is true if we look at the current BTC/USD price action.
The bias is further supported by price staying below its 50 and 100-H MA while closing in on its 200H MA. The RSI and Stochastic Oscillator are both in the neutral zone after recovering from the oversold area.
Upon failing to test 7135-fiat as our primary downside target, we relocated it to 7275-fiat.
As of now, following the recent short-term bullish correction, we are now once again inside the range defined by 7459-60-fiat as interim support and 7813-fiat as interim resistance. Expecting an extended bearish action, we are currently refraining ourselves from putting an intrarange long position towards the resistance. Instead, we are in a wait-and-watch mood to put a short towards 7275-fiat if the 7459-fiat support is broken. A stop-loss 2-pips above the entry point will define our risk management perspective.
Nevertheless, if BTC/USD manages to revive the near-term bullish sentiment, we’ll wait for it to break above 7600-fiat before putting our long position towards 7813-fiat. A stop-loss – again – 2-pips below the entry point will protect us in case the trend reverses.
Featured image from Shutterstock. Charts from TradingView.