Analysis provided by Ashton Fraser, learn more about his Forex Reversals trading strategies.
Over the weekend we saw a firm rise on the most popular digital currency, Bitcoin, until this morning, where some swift bears took over.
Let’s take a closer look at BTC/USD on the hourly chart below (click to expand):
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I’ve performed the Fibonacci study from March’s low at 595 until today’s high, at 640. If you look at the 7am GMT candle, it closed just above the upper Bollinger band. Of course, price has a tendency in general to remain within the bands, but this is nowhere near enough of a reason for us to suspect a retrace (nevermind a reversal). However, by the time of the next candle, both the Accelerator Oscillator and Awesome Oscillator turned red, informing us of some bears coming into play. Indeed, on the very next candle, the Stochastics had crossed down whilst being undersold, with that candle bearing absolutely no lower wick, another sign of bearish strength.
Since then, price has continued to fall, reaching the 50% level, before bouncing back up to the 38.2% Fibonacci retracement level, where it is currently residing. With all the indicators still implying there’s room for more southern movement, I expect price to re-test 50% very soon (at 618).
However, there’s some support not much further down, as can be seen via the trendline below, so it will be interesting to see how price reacts at that point.