Bulls have utterly failed in capitalizing on the exuberance in the digital currency. As the price surged and sustained above the previous resistance zone of $280-285, the market was optimistic of the value crossing the $300-mark. However, even though $285 has not been breached on the lower end, considerable damage has already been done. Aggressive profit booking has led to price slipping from a high of $297 to a low of $286. Bitcoin is currently trading at $288.82, and bulls are fast losing steam which may become a cause of worry.
As can be seen from the 240-minute BTC/USD chart above, the rally peaked out without kissing $300. Here are some technical considerations which have must not be missed now:
- The Bollinger Trap – Even with strong momentum on their side, the bulls were tamed by the Bollinger band resistance. The upper range of the band, currently near $297, continues to act as a major deterrent for the upmove.
- Weak Strength – While the price floats above the previous resistance, the strength is fast decreasing. The Relative Strength Index reading has collapsed from 76 to 62. Further weakening in the underlying strength could severely dent the bullish mood, and lead to a fall.
- Negative Momentum – The Moving Average Convergence Divergence (MACD) reading has touched the signal line on the downside. The histogram value has given up all its gains and is barely positive at 0.015.
The indicators above foretell a minor correction in the cryptocurrency. But, aggressive traders can go long with a stop-loss placed just below $280 for a target of $297. $280 should act as a strong support level in the near term, and hence, a close below it should be seen as a warning sign and all the buy positions must be liquidated in that scenario. Investors with a long-term horizon can consider buying into corrections.