Bitcoin on Tuesday showed some signs of bottoming out as it consolidated sideways a little above $3,500, its psychological support.
The BTC/USD is now trading at 3734-fiat, up 1.58% from the previous day close. Meanwhile, the pair is trading inside a range that is no more than $230 wide. Though volatile, the choppy price action is still stable compared to Bitcoin’s performance in the past two weeks.
The CME Bitcoin Futures are also going to expire this week on Friday. Tom Lee from Fundstrat had earlier noted that volatility in Bitcoin spot market increases every time a contract heads towards its expiry date. Eventually, the price does down, finds a support and picks up again soon after the expiry date. It is expected that BTC/USD will once again test new support levels – perhaps towards 3000-3500-fiat range – even without any influence from the futures contracts, before it rebounds.
The US Dollar, meanwhile, established its two-week high after President Donald Trump threatened China of higher trade tariffs. It could make investors hold on their greenbacks and avoid liquidating for quoted assets, including stocks, commodities and even crypto.
As of now, the pressure is visibly on 3500-fiat to hold what is the minimum bullish presence in the bitcoin market. The BTC/USD pair is already trending inside a downward parallel channel, now the midst of two equally strong levels. The prevailing bearish momentum could allow the pair to test the channel support first and then could see a rebound towards the channel resistance. In another scenario, BTC/USD could break below the channel support and continue its fall to find next support at 3000-fiat.
The bearish bias is also visible in the RSI momentum indicator which has reversed from 45 already, proving a selling sentiment. The MACD, for now, is placed slightly inside a bullish zone albeit hinting a reversal anytime soon.
The BTC/USD in near-term is trending inside a symmetric triangle, giving plenty of exit and entry hints for day traders and take out attractive intraday profits. We are now reversing from the triangle resistance, which has allowed us to enter a short position towards the triangle support. A further break below the said support would have us open another short, this time towards 3560-fiat. In both the positions, we will be maintaining our stop losses just 4-5 dollar above the entry point. It will help us avoid getting chopped during an unexpected price action.
Looking the other way, a break above the triangle resistance would have us target the 200-period exponential moving average as an intermediate upside target. A further break and we would have another long opportunity towards 3818-fiat. In both the positions, a stop loss just 4-5 dollar below the entry point will define our risk management perspective.
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Last modified: May 20, 2020 2:20 PM UTC