Trading Bitcoin: Small Bounce After Sell-Off

Small Bounce After Sell-Off

Today, price is bouncing back as the bulls retest resistance at $10.4k. Bitcoin experienced a harsh sell-off earlier in the week after topping at $10.9k. However, price is now testing upwards with strong resistance directly above.

Daily

Over the course of Bitcoin’s history, the 128MA (green) has been a critical area of support throughout the last 10 years. On the chart above, we can see price bounced off this moving average after declining to roughly $9.7k. That being said, Bitcoin is still trading below the 50MA which is acting as resistance at roughly $10.4k. Additionally, the parabolic SAR (blue x’s) is still in a bullish posture as it acts as support at $9.7k. Note that the parabolic SAR and the 128MA have formed a perfect confluence of support at $9.7k. If price should fall below this support level, expect a decline to the 200MA (orange) at roughly $8.2k.

From a bullish perspective, Bitcoin needs to break above its previous lower high at $10.9k. Until Bitcoin can negate the descending trend line and form a new higher high, the structure of the trend remains bearish.

4 Hour

Above is Bitcoin’s 4 hour chart in which price was rejected by the 200MA (orange). Bitcoin faces a confluence of resistance at 10.4k. This confluence consists of both moving averages (orange & grey) and the sequential setup trend line (red dotted line). Until the bulls can break above this support level, price will continue to carry neutral-bearish momentum.

Conclusion

Overall, Bitcoin is still in a descending triangle formation which could take us down to $8k. Until the bulls can break above resistance at 10.4k, then create a higher high at $11k, the overall structure of the trend remains bearish.