A lot of people have asked about BTCs failure to close above the 6850 mark. Is this a fake breakout? Are we still bullish?
Lets start by looking at the weekly time frame. BTC had a good close just above the previous weeks candle. This is a weak bullish signal. Unfortunately, the weekly candle close was not as strong as we wanted it to be.
What about on the daily time frame? Bitcoin is overbought on some momentum oscilators - notably the Stochastic RSI.
We see two scenarios at this point:
1. Worst case BEAR scenario: We retest the 6800 resistance and are rejected - this will lead to us falling back to the 6250-6500 area. 2. Best case BULL scenario: We dip/range slightly to neutralize our RSI before breaking out over 6840.
Because of this we recommend waiting for a candle closing firmly above 6840 to reinforce your position. At this point we can add more capital to our BTC trade.
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Our support level has held strong over the last 24 hours and we are slowly traveling along the edge of an upward channel.
Where will BTC go from here? We are back to speculative trading at this point - there are two scenarios with equal weight.
1) We could see a positve breakout and BTC retrace upwards to the 6500-6600 level. This is supported by the expected fibonacci retracement and the 4 and 8 hour momentum indicators.
2) BTC will retest a stronger support area at 6050 - 6150 and look for more buyers
If you are an AGGRESSIVE trader and looking to get into the market you can buy with a small percentage of your capital.
Otherwise be patient and wait for greater market certainty.
We followed scenario 1 perfectly - retesting the resistance at 6800 before falling back to 6300. We are hovering at the bottom edge of the trend channel.
This is a speculative area for us as BTC no longer has a clear bullish trajectory. We recommend moving stop-losses to just below this trend channel at 6200 (this is near entry for our BTC trade)
If we break this channel in the next few hours we will exit our position and go back to looking for entries near the 5750 - 6000 area.
We followed scenario 1 perfectly - retesting the resistance at 6800 before falling back to 6300. We are hovering at the bottom edge of the trend channel.
This is a speculative area for us as BTC no longer has a clear bullish trajectory. We recommend moving stop-losses to just below this trend channel at 6200 (this is near entry for our BTC trade)
If we break this channel in the next few hours we will exit our position and go back to looking for entries near the 5750 - 6000 area.