The bitcoin price on Wednesday recovered as much as 2.45 percent after reports indicated that Fidelity would launch its crypto custody service as soon as March.
At 18:00 UTC, the bitcoin-US dollar exchange rate (BTC/USD) was trading at $3,443 on crypto exchange Coinbase, down 0.6 percent from its intraday high at $3,459.
Earlier today, the market had opened at a lower rate at $3,337 during the Asian session, while trending lower inside a descending channel formation. The positive sentiment kicked in after Fidelity Investments, a renowned capital management firm, announced that it would launch its much-awaited crypto custody service in Q1 2019.
The presence of Fidelity in the bitcoin market is bullish for speculators. They believe that a respected custody service would attract institutional investments, for it would reduce the risks concerning thefts. So far, big investors have excused themselves from putting their money in the hands of bitcoin industry startups, hesitant to trust these nascent firms. Fidelity, in the best case scenario, would fill that gap with its proven track record as an asset manager.
In our previous analysis, we had anticipated that the bitcoin price would test $3,448 as our upside target. Fidelity acted like a catalyst, the bitcoin price jumped, and we managed to exit our long trade on a small profit. Now that we are again close to $3,448, we realize it is still serving as our interim resistance.
Meanwhile, bitcoin is trending above a newly-formed, small ascending trendline, which is now serving as temporary support on the next downside correction. Together, the resistance at $3,448 and the ascending trendline is forming a rising triangle pattern. Traditionally, an ascending triangle is a bullish pattern.
As the pattern develops, we should see a decline in volume with each candle formation. When an upside breakout occurs, there should also be a rise in trading volume. Naturally, with the bitcoin price so close to the resistance already, we are starting the day with a breakout target position.
If we break above $3,448, we will open a long position towards the 200-period moving average curve (depicted in red). At the same time, we will put a stop loss order 1-pip below the entry position.
In the event of a pullback scenario, we will wait for the bitcoin price to break below the ascending trendline formation. If it does, we will open a short position towards $3,337 while maintaining a stop loss order 1-pip above the local swing high.
Featured Image from Shutterstock. Charts from TradingView.