BTC/USD Bounce From 40K, Fake-out or Shake-out?

BTC/USD Bounce From 40K, Fake-out or Shake-out?

Bitcoin Technical Price Outlook: BTC/USD Neart-term Trade Levels

Bitcoin prices are down nearly 7% this week despite paring early losses with BTC/USD trading at 44046 in early US trade on Thursday. The recent recovery keeps price within the monthly downtrend and while the cryptocurrency bloc could continue to see some upside near-term, the risk remains weighted to the downside while within this near-term technical formation- we’re looking to confirm a low in price. These are the updated targets and invalidation levels that matter on the BTC/USD technical price charts. Review my latest Strategy Webinar for an in-depth breakdown of this Bitcoin setup and more.

Bitcoin Price Chart – BTC/USD Daily

Chart Prepared by Michael Boutros (arithmetic), Technical Strategist; Bitcoin on Tradingview

Technical Outlook: In my last Bitcoin Price Outlook we noted that the September 7th plunge had rebounding off multi-month uptrend support while warning that, “Sentiment is stretched here so stay nimble and respect the closes- ultimately a break below 43686 could see another bout of accelerated losses.The bulls aren’t in the clear just yet. . .” A break lower on the 20th prompted a decline of nearly 17% with BTC/USD registering a low at 39573 on Monday before rebounding – is a low now in place?

Daily resistance stands with the 200-day moving average around ~45800 backed by the objective monthly open at 47118 and the 61.8% Fibonacci retracement of the September range at 47844 – a breach / daily close above this threshold would be needed to suggest a more significant low was registered this week. Critical supportremains at 37940-38777 – a region defined by the 100% extension of the monthly decline and the 61.8% retracement of the June advance

Bitcoin Price Chart – BTC/USD Daily (2018 Price Action Parallel)

Bitcoin Price Chart - BTC/USD Daily - Cryptocurrency Trade Outlook - Technical Forecast - 2018 Price Parallel (log scale)

Chart Prepared by Michael Boutros (log scale), Technical Strategist; Bitcoin on Tradingview

Steady as she goes! The price 2018 price parallel we’ve been tracking for months now continues to offer guidance as to the structure of recent Bitcoin price action. Earlier this month we highlighted the severity of, “ this correction off the highs – the last two instances of similar washouts can be seen at the January and February highs. Both scenarios ultimately marked a new intraday low (beyond the initial washout) before resumption and ended up being pullbacks within the broader uptrend.” A new low has registered- we’re now on the lookout for downside exhaustion / low in price.

Bitcoin Price Chart – BTC/USD 240min

Bitcoin Price Chart - BTC/USD 240min - Cryptocurrency Trade Outlook - Technical Forecast

Notes: A closer look at Bitcoin price action shows BTC/USD trading within the confines of a descending pitchfork formation extending off the monthly highs. Initial resistance eyed at the median-line / 44685– look for possible price inflection there IF reached with a breach / close above this formation needed to mark resumption towards 51030. Initial support rests at 41929 with a break lower keeping the focus on critical support at 37940-38777.

Bottom line: The Bitcoin plunge turned off near-term downtrend support and while we could see more recovery in the short-run, the risk remains lower while within this formation. From at trading standpoint, we’re looking for either failure on a another test of the lower parallels (37940-38777) OR a topside breach above the upper parallel around 48000 to mark alleviate the downside pressure here / shift the focus higher again. Stay tuned, more volatility to come. . .

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

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– Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex

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