Trading Bitcoin: $800 Daily Drop, Now What?

$800 Daily Drop, Now What?

After an $800 daily drop, Bitcoin is now hovering at $10k. On the daily chart above, Bitcoin has undergone a price flip to a red 1 candle. As of now, there is strong support at the 5-digit psychological level of $10k. That being said, the last line of defense for the bulls will be $9.5k. This price also aligns with the 0.382 support fibonacci line as well as the sequential setup trend line. Furthermore, the 128MA (green) is approaching support at $9.5k as well. Overall, there is a large confluence of support at $9.5k which means if price should fall below it, Bitcoin may experience an additional 20% drop from $9.5k. This would take us into the $7k-$9k price region.

Many Bitcoin traders are familiar with the descending triangle which occurred at $6k after 2017’s parabolic run up. Moreover, price is entering a similar formation with a base at $9.5k after the spring parabolic rally to $14k.

4 Hour

Bitcoin’s 4 hour chart above is currently on a green 7 of 9 candle. Therefore, in 8 hours Bitcoin will likely reach a red 9 candle and enter a countdown phase. Overall, Bitcoin’s 4-hour chart is severely bearish for the time being.

Cryptocurrency News

Binance, the world’s largest cryptocurrency exchange, was banned in the US early this year for not conforming to proper KYC & AML protocol. But now, Binance has confirmed they will launch a separate branch which will conform to regulations and serve US customers. This may lead Binance to add fiat currency pairings, a new exploration for the crypto-native platform. Overall, US crypto exchanges such as Coinbase, Kraken, and Gemini will become less relevant once Binance US is live.

Conclusion

After an $800 daily drop, the bulls last line of defense is $9.5k. Most notably, the more times price tests support, the weaker that support level becomes. Bitcoin faces harsh resistance at the descending trend line and sequential setup trend line at $11.3k. Until the bulls can create a higher high, the bears are in control of the macro trend. In the interim, look for another downward test of $10k. If price closes below $10k it is probable that support at $9.5k will not hold.

Disclaimer: The author of the article hodls Bitcoin.