Bitcoin on Tuesday depreciated more than 3 percent against the US Dollar after reversing from a bear flag top yesterday.
The BTC/USD walked the day carrying the prevailing bearish sentiment on its shoulders. The early Asian trading session opened at 6518-fiat and didn’t wait much before dropping below key support areas around 6500-fiat and 6400-fiat. By the end of the mid-Asian session and the beginning of early European trading hours, BTC/USD had established its intraday low towards 6370-fiat. At the time of the press, the pair is consolidating sideways in near-term, showing minimum bounce back sentiment. Ideally, the price is forming a bear flagpole.
We had expected a reversal to initiate a run towards the medium-term range support near 6118-fiat. There is a crucial support zone midway near 6400-fiat as we approach the said range parameter. If BTC/USD doesn’t hold through the interim buying sentiment area, then we could be looking at a short position riot towards 6118-fiat. Fortunately, the area between 6118-fiat and 5785-fiat is also our whale accumulating channel, what we believe could create some potential long opportunities towards the descending trendline. This trendline has been there for almost 9-months, and it is one of the main reasons why we are so bearish in the medium-run.
Indeed, a breakdown scenario, in which the price breaks below the bottom area between 5785-fiat and 5850-fiat, could invoke a free fall towards 4500-fiat. Similarly, a breakout above the falling trendline could mean an extended bull run towards 8348-fiat, the neckline of the inverse head & shoulder, incomplete for now.
The RSI and Stochastic indicate an extended selling action. The RSI is particularly looking to repeat its pullback from the overbought area towards the 30-40 range.
Our intraday strategy is influencing us to keep our positions intrarange between the symmetrical triangle formation. So far, we have squeezed a small profit out of our long position from 6370-fiat to 6450-fiat, and a reversal from the upper trendline is keeping us short towards lower trendline while eyeing 6370-fiat as interim support. A stop loss on short is necessary so we are putting it just two-pips above the upper trendline.
A break below 6370-fiat will be an altogether different scenario to play out. The extent of a bearish action at this point could be huge. So, near-term short positions will yield results anyhow. We will avoid playing a breakdown strategy merely because of its minimal profitability and high risk (in case one becomes too bearish towards the medium-term support near 6118-fiat). Instead, we’ll be waiting for a large green candle to allow us to put a long position on a bounce back, towards the nearest upside target. If a bounce back takes place from 6370-fiat, we’ll go long towards the upper trendline of the symmetric triangle, while keeping our stop loss 3-pips below the entry point.
