Early on Wednesday morning, we published an analysis piece that outlined a potentially bearish bias in the bitcoin price as we head into the European session. The bias derived from the decline we saw in the bitcoin price throughout Tuesday night and into Wednesday morning, and we slated 236 as an initial downside target. Action throughout the day however has offered up a reversal of this bias, and – in the medium term at least – we are now looking at weekly highs as the potential winning trade. It is worth noting that this is medium-term, and short term we may still be due for an intraday correction. So, with this in mind, what should we be keeping an eye on? Let’s take a look. As the chart shows, action throughout today has traded between range support (now just shy of 236 flat) and range resistance (now around 238.50). Current trading price at time of writing is 237.72.
How do we expect the US afternoon session to mature? Well, using the parameters highlighted, we will likely see an initial decline towards the aforementioned 236, may be as low as 235.5. However, if this level holds as support (as it has done on a couple of occasions already today) we expect a return to channel resistance to a minimum of current levels. This offers a nice opportunity to buy on a dip in take a quick profit. What we really want is a close above this level. If we get this, we will likely see one of two things. First, a run straight up to daily highs at 241. Second, a brief correction back down to resistance come support, and a return to the bullish momentum and the aforementioned upside run. For those looking to take a quick downside profit on the run towards support a stop just ahead of 239 flat would work. For those waiting for the retest of resistance at 236, a stop just ahead of 235 would ensure a timely exit in the event of a bias invalidation.
Charts from Trading View