In what was almost a mirror image of last week’s action, the bitcoin price tumbled on Sunday afternoon from the 245 region from which we closed out last week to just shy of 235 early this morning. Since then, we have had some range action in what looks to be a wedge, and it is this action that will likely define the behavior of bitcoin price as we head into the European morning session. With this in mind, what are the levels to keep an eye on? Here is what you need to know.
As the chart shows, and as aforementioned, (BTC/USD) has traded relatively flat and sideways over the past 12 hours, between an upper trendline of 236 – 237 and a lower trendline just ahead of 234 flat. These are the levels to watch. We are currently trading closer to the former than the latter, suggesting we could be in for a short term correction before the European lunch kicks in.
In the event of such a correction, look to 234 as an intraday support level – price will not trade below this level without invalidating the wedge. If we do get a test of this level, and it holds, look for a return to 236. A close above 237 on the 15 minute time frame would suggest a medium-term reversal of the current bearish/flat momentum, and give us something to trade. 243 served as strong support late last week, and could present us with a sensible upside target in the event of a breakout.
As ever, we must be aware that any fundamental changes could have a considerable impact on the value of bitcoin, especially with its relatively low liquidity compared to fiat counterparts. With this in mind, a stop loss below the lower channel at 234 would mitigate risk in the event of a downside break.
Chart courtesy of Bitstamp