Weekly Bearish Retest?
One week later and we've finally seen Bitcoin have a bit of a bounce as anticipated, reaching as high as $7,870. However, this bounce might be an opportunity to short the bounce rather than the starts of a bullish reversal.
Bitcoin Weekly Chart
Bitcoin's plunge finally found a temporary bottom just below $7,000 where it set up for a bounce after forming an inverted head and shoulders on the lower time frames. The bounce was quite significant as price rallied 20% from the lows but unfortunately it rallied straight into a major weekly resistance zone. Lots of traders were quite bullish calling for mid-$8,000's while I used the opportunity to fill some swing shorts in the $7,800's.
So why am I favoring shorts in this region? Market structure broke on both the daily and weekly - price set a lower low - and now we've got a near textbook perfect bearish retest on our hands. Additionally, Bitcoin is in danger of losing the weekly 50 MA, currently around $7,250, which set up a 20%+ drop in price last time around. Now Bitcoin never makes things simple for traders and it wouldn't surprise me to see a pump in the next day or two to at least $7,550 and I wouldn't rule out low $8,000's. That being said, any move to the upside would be an opportunity to add to shorts for me and I'm not entertaining bullish scenarios under $8,200. My downside target remains sub-$6,000 though if price action gives me a reason to flip bullish I certainly will. It's also worth noting that unless price manages to set a higher high above $7,850 this will align quite well with the gold fractal I posted last week.
Support: $5,900-6,300
Resistance: $7,600-8,200
Intraday Chart - What I'm Watching
Here's the main chart I'm watching over the next couple days. As we can see Bitcoin broke down from an ascending channel and is now recovering after dropping into the $7,200's. The main thing I'm looking for is a bearish re-test of the channel and the downtrend from the highs above $7,800 which should line up roughly with the monthly open at $7,550. A rejection in that region would be a clear short entry for me. If Bitcoin does manage to regain the monthly open and move higher I'll be watching for signs of weakness to add to shorts; $8,230 marks the last 4-hour swing high before BTC broke down and that would be my invalidation level for my bearish bias.
Decide to trade based on my charts above? Register at Bybit which is currently offering up to $90 bonus for new sign-ups and is proving itself to be the best margin exchange out there. You can also read my full review of Bybit.
Make sure you don't miss the latest reviews & tips from Crypto Advocate. Subscribe today!
Disclaimer: this is not financial advice and cryptoadvocate.net is in no way responsible for any claims, losses or expenses that may result by following information available on this site.
cryptoadvocate.net may be entitled to referral bonuses when readers make use of referral links on cryptoadvocate.net