Analysis provided by Ashton Fraser, learn more about his trading strategies with the Forex Reversal Indicator.
Bitcoin continues to fall this morning, well and truly breaking the shackles imposed upon it via the Bollinger squeeze.
Let’s take a closer look at the BTC/USD chart on the four hour timeframe below (click to expand):
I’ve performed the Fibonacci study from the low of last month, on the 25th of February at 430, to the high of this month on the 4th, at almost 700.
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As we can see, there was a squeeze in place from the 12th of March, until pretty much yesterday, marked by the white ellipse, but the bears I spoke about at the end of last week have now come into fruition.
The 23.6% Fibonacci retracement level has been a huge line of resistance since the 7th of March, with price testing that line on no less than six separate occasions. Sometimes price may have breached the line, just, but what’s important is that no candle closed above 23.6%. This tells us how powerful that Fib line really is, and if other bearish technicals coincide like they have done today, then that resistance will help push down price even further. This is exactly what is happening.
One point that must be noted is concerning the 38.2% level. Look how close price is now to 38.2% (approximately 595), this could prove a stumbling block, given the fact it’s already been tested before, back on the 8th (circled in blue).
In addition, just above 38.2%, we have the 600 price mark. With the Accelerator Oscillator now turning green and the Stochastics approaching oversold territory, I expect there to be a bounce off 38.2% / 600 very soon.
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