Bitcoin Price Outlook
Hours ago, Bitcoin was trading at $10,800, down over 5% on the day as a result of overwhelming sell-side pressure. But, all of a sudden, the cryptocurrency bounced, gaining around 4% in minutes. And as of the time of writing this, BTC sits at $11,300, down 2% in the past 24 hours. What levels should investors be watching out for?
Well, according to Jacob Canfield, a popular trader, all eyes should be in and around $10,600 right now. This level is where Bitcoin’s 200 exponential moving average (EMA) meets the 0.236 Fibonacci Retracement of $14,000 and an uptrend. If BTC loses the 200 EMA, which has acted as clear support since February of this year, Canfield notes that Bitcoin could see a sharper correction to the also important 50 moving average around $9,900.
And right now, the outlook for some traders seems to be more downside. As seen below, Level’s Josh Rager noted that Saturday’s candle was not entirely bullish, in that it closed under the weekly resistance zone, which sits around $11,400 and $11,500. And, Rager noted yesterday that if BTC doesn’t manage to hold $10,900, bulls may lose hope.
Also, Bitcoin, according to Chonis, is forming a clear head and shoulders pattern on its four-hour chart, one that some say will break down due to selling pressure.
Also, Peter Brandt notes that Bitcoin’s parabolic pattern, which originated in December of last year, has finally broken.
With this, some are wary that a large correction could ensue, one that could bring Bitcoin back to $7,000 or even pre-rally levels in the $4,000s and $5,000s.
You see, when parabolas correct in financial markets, they correct hard. In Bitcoin’s case, this is especially relevant, as it exists as an early-stage asset that is hyper-volatile and reflexive.
As Brandt, a legendary commodities trader, recently quipped, a violation of the parabola could send BTC falling back to Earth. In fact, he quipped in a tweet that the cryptocurrency could lose 80% of its year-to-date high value:
“If current parabolic phase is violated, we could expect either an 80% correction of 7-month advance or much smaller correction w/ definition of new parabola w/ shallower slope. $BTC Note formation of possible 2-wk H&S or H&S failure”, the long-term Bitcoin proponent wrote.
Title Image Courtesy of Andre Francois Mckenzie Via Unsplash