Bitcoin sinks for the third consecutive day as market witnesses profit booking. Yesterday’s loss also meant that Bitcoin retested the support line of the upward sloping channel, but unfortunately, there are no clear technical indications as to whether the buyers will again lift the price up or will the bears pull the price further down. But keeping a close watch on some key technical levels will be of utmost importance.
Bitcoin is currently trading at $242.98, down 0.53 percent since yesterday.
Apart from the trading pattern, traders must also heed the below-discussed technical considerations to avoid any negative surprises.
Bitcoin Chart Structure – Bitcoin continues to spend time in the upward trading channel. After having failed to sustain above the 200-day SMA of $245.4864, the cryptocurrency has come down to the support trendline.
Fibonacci Retracement – Bitcoin seems to be flirting with the 38.2% Fibonacci retracement level of $243.22. The key to bulls’ success will depend on how much time the cryptocurrency spends above this level and not below it.
Moving Average Convergence Divergence – The falling price fails to stem the rise in MACD, which has now gained to 2.2475. The Signal Line and the Histogram remain strong with values of 1.1827 and 1.0648 respectively.
Momentum – The Momentum value has gained marginally to 6.0400. This reflects that buyers are looking to make their move on this dip.
Money Flow Index – In a departure from the above two technical indicators, the MFI has depreciated sharply to 61.1788.
Relative Strength Index – The RSI posts minor loss to state a value of 58.6352.
While two of the technical indicators are representing an optimistic outlook, two are also signaling a weak scenario for Bitcoin.
For this particular case, follow the chart structure only. Go long as was discussed in The Long Strategy by limiting the losses by practicing a tight stop-loss.