Trading Bitcoin: Rejected at $10.8k

Rejected at $10.8k

Yesterday, Bitcoin experienced a reaction rally after this weekend’s severe decline. However, this reaction rally was short-lived and price was rejected at $10.8k. Bitcoin has now made another lower high at $10.8k which will, in theory, act as future resistance. On the daily chart above, Bitcoin has undergone a price flip to a red 1. According to sequential theory, red and green 1’s are considered to be in a ‘no-trade zone.’ That being said, a red 2 closing below a red 1 is an indication to place a short trade. While sequential is not yet indicating a short trade, the structure of Bitcoin’s trend is bearish. Until price can break above the previous higher low at $12.5k, the structure of Bitcoin’s trend will remain bearish.

4 Hour

Bitcoin’s 4 hour chart has recently undergone a price flip to a red 1 candle. Currently, the sequential indicator is on a red 2 of 9 candle. If our current candle closes below the previous red 1, that is an indication to take a short trade. Additionally, all three moving averages and a setup trend line are acting as resistance at roughly $10.4k – $10.6k.

BTC/USD Shorts

Bitcoin/USD shorts on Bitfinex are at their lowest level ever. Recently, the shorts broke below a fractal bottom and further downside quickly followed. A short squeeze is an unlikely factor. Therefore, there really isn’t much fuel for the bulls to power the market higher.

Conclusion

Bitcoin’s daily chart has flipped to a red 1. If price closes on a red 2 tomorrow below a red 1, bearish momentum is likely to continue. Technicals are appearing bearish in the short term with the next support level at $10k. Resistance remains at our previous higher low of $10.8k.