Just close to a week of bearish action, the Bitcoin market is taking a break near a crucial support level.
So far, we have seen the BTC/USD establishing its latest high at 8512-fiat, upon which the pair has undergone strong bearish correction action. We had found a weak support at 7814-fiat, but it was invalidated by the prevailing sentiment, following which we dropped further to the south to establish a new support level at 7459-fiat. At the time of this writing, we are sailing right above that level.
Nevertheless, each downside action also presented us with adequate short opportunities, through which we drew small profits in succession. Now, as we enter another day of trading, the market’s low volatility is becoming less favorable to day trading. In the last 24 hours itself, the BTC/USD pair has hardly fluctuated. So what do we have in our plates today? Let’s have a look.
Before we discuss our usual indicators, let’s focus on the parallel channel we have drawn in the 4H chart above. This channel represents a bearish flag, a kind of a knee-jerk corrective phase after an extended downside action. It could mean that bearish sentiment will prevail further and could test the psychological support near 7400-fiat after all.
Coming to our indicators, the BTC/USD pair has slipped below its 50H and 100H MA, while waiting to cross below its 200H MA should the bearish sentiment stays for dinner. The RSI and Stochastic Oscillator – both – are in their respective oversold territory, awaiting correction. Overall, the selling sentiment is prevailing on the 4H BTC/USD chart.
The range we drew in our yesterday’s analysis, defined by 7459-fiat as interim support and 7814-fiat as interim resistance, still stands guard. The BTC/USD is trending sideways in absence of a strong bias, leaving us no option but to keep our positions open and wait for some intrarange/breakout action. For the sake of mentioning, we’ll say our positions again, anyway.
As of now, we have a long position open towards 7814-fiat in line with our intrrange startegy. At the same time, we have put an alert near 7459-fiat. If the support is broken – which is quite possible – we’ll enter a short position towards the 50% Fibonacci level at 7134-fiat. In this position, we’ll keep our stop loss 3-pips above our entry point.
But in case, the BTC/USD pair tends to revive the bullish sentiment and breaks above 7814-fiat, we won’t waste any time to target 8000-fiat as our next psychological upside. As we put a long position towards the said level, a stop loss 2-pips below the entry point will be protecting us.
Featured image from Shutterstock.
Last modified: May 20, 2020 6:20 PM