Technical Analysis and Market Entry: Bitcoin Price Behaviour Points to Another Looming Drop
- Bitcoin is back within the control of the market bears, after failing to sustain $10,000.
- BTC/USD remains vulnerable to further downside risks, given current price behaviour.
BTC/USD: Recent Price Behaviour
Bitcoin price is firmly within the control of the market bears; it is running at its third consecutive week in the red. BTC/USD has dropped some 16% during the noted period of decline, trading at the lowest level seen in three weeks. The price was dealt a harsh blow after a very short-lived spike into the psychological $10,000 territory. Heavy sellers were camped within, a big area, which has previously proven to be of difficulty breaking down.
The decline also came into play following a rejection at the 38.2% Fibonacci; the swing high at 24 June ($13,800) to the swing low on 21 October ($7350). Bitcoin had been enjoying such a strong 2019 initially, having gained as much as 300%. The price started the year down at $3395, to the run-up to heights at $13,800 as mentioned above on 24 June. BTC then entered a bear market; any rallies that were seen were then being sold.
Weekly Chart View
A long-running ascending trend line is supporting price action via the weekly chart view. It has been in play since May and provided comfort to the price on numerous occasions. BTC/USD is heading for another retest of a critical demand zone, which runs from $8200 – $7500. It is a territory that has supported the price since May, given the significance of its service as a cushion; a breach could prove to be punishing
Daily Chart View
The downside pressure kicked into play following the slow down up at $9000 – $10,000, many rejections were seen here. Bitcoin was trading within this range from 26 October to 7 November. BTC/USD attempted across twelve sessions to push through; however, there was not enough momentum from the bulls. The range, as noted above, was containing the price, with the bottom weakening on each test.
Finally, on 8 November, the bears managed to force a breach, seeing the $9000 bottom giving way. A fresh wave of selling pressure was observed, exacerbating the move to the downside. The price is once again moving within consolidation mode, ahead of further committed moves. Narrowing conditions were then seen from 9 – 14 November, making BTC/USD subject to another breakout.
Due to a recent breach of daily support at $8600, short positions remain attractive. The noted level should now act as new resistance, capping any potential BTC/USD pullback. A sell around the current market price, targets at; $7900, $7550 and then $7250. Stops to be placed at $8900.
Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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