On a few occasions over the last week or so I have highlighted the potential for some degree of correction in the bitcoin price. When open market assets, whatever sort they are, run up to the degree that bitcoin has over the last month or so, the run can only last so long. At some point, the shorter-term operators that were picking up exposures in anticipation of near-term profit-taking exit the market and pull price down with them as they do. This isn’t necessarily an indication that the longer-term run is over (often the exact opposite) but it does generally lead to a slightly sharper price decline than might be representative of just the shorter-term operators pulling out of their positions.
Because when some of the longer-term operators see price falling, they assume that this is the end of a longer-term bull market and also duck out of a portion of their holdings. This is why we built our strategy the way we did. It means we can profit from action on either side of the market; that is, if price runs to the upside or if it corrects. Right now, we are in a corrective phase and we have to adapt to accommodate.
So, take a quick look at the chart below to get an idea of what happened overnight and where things stand right now.
As the chart shows, the range we are looking at for the session today is defined by support to the downside at 3926 and resistance to the outside at 4058. If we see price close above resistance, we will enter long towards an upside target of 4080. Conversely, a close below support will have is in short towards 3900 flat. A stop on both positions will ensure that we are taken out the entry in the event of a bias reversal.
Let’s see how things play out.
Charts courtesy of Trading View