At last, Bitcoin price stopped taking strikes from its crucial resistance level near $6,500 and went for a home run, instead.
Then, the referee called it a foul. In simple words, Bitcoin crashed towards the same consolidation range that was holding it before the upside breakout.
The BTC/USD on Wednesday attempted a strong upside breakout, rising as much as 7.8 percent and coming out of an overlong consolidation phase. The pair started began the day on a bearish note and slipped towards 6440-fiat. It, however, began to express a massive bullish sentiment during the early Asian trading session and jumped from 6441-fiat to 6899-fiat within an hour. The pair then slipped further owing to a considerably large long positions getting executed. The correction accelerated during the European session and formed lower lows towards 6610-fiat. And now, at the beginning of the US session, the price has almost negated its gains following a massive dump.
BTC/USD had breached the ascending channel resistance we discussed in our previous analysis, as we hoped. The pair was then supported by another ascending trendline (depicted in orange).
As a result of a highly volatile upside momentum, the technical indicators had also improved for Bitcoin. Now, that’s not the case. The BTC/USD is now trading below its 100 and 200H moving averages.
The RSI and Stochastic indicators, meanwhile, have slipped into the oversold area following the latest dump.
Following the jump, we were able to draw some amazing profits from our long positions towards 6700-fiat. Not ready for a dump as this one, we refrained from entering any new positions. It is advised first to note the scope of the latest crash. For now, it has rested around 6400-fiat, but an extended correction could bring the price to as low as 6300-fiat.
If we are able to bounce back from here, we will find our new support near 6400-fiat, while once again looking at 6500-fiat as our potential resistance level. At the same time, our upside target on a breakout above resistance would be towards 6550fiat, and our downside target on a breakout below 6400-fiat would be towards 6300-fiat. In either case, our stops will be placed 2-pips above/below the entry points.
Overall, we recommend all to follow a wait and watch approach until price settles inside its new range. We will continue to monitor the market for the latest updates.
What a freak show, indeed!
Featured image from Shutterstock. Charts from TradingView.
Last modified: May 20, 2020 6:05 PM UTC