Bitcoin’s price action has been fairly predictable over the weekend, with the market not really showing much clarity upon first viewing, that is until we delve deeper into the technicals.
Let’s take a closer look at the BTC/USD H4 chart below (click to expand):
I’ve performed today’s Fibonacci study from the low of the month at 343, until the high of the month at 545.
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“Bitcoin may well continue to fluctuate between 23.6% and 38.2% for the rest of the day, but if price can manage to break 38.2%, then I’d expect a drop to 443 at 50%”
Both things actually occurred, albeit in a different order. I.e. first we saw a breaking of the 38.2% Fib level at 482, followed by a testing of the 50% level at 463. Finally, we’ve seen a ranging of price between 23.6% and 38.2% at 586 and 482 respectively, marked in a white rectangle.
I imagine this current period of consolidation between these two levels (23.6% and 38.2%) will continue for the rest of the day. If you look at the few candles prior to the current candle, you’ll see how all of their upper wicks are rather long, with minimal lower wicks. Basically we have a few inverted hammers and shooting stars, telling me price is going to struggle to break above 23.6%, which, although in its natural form is a Fib retracement level from a swing low to a swing high, thereby a natural support line, has now turned into a resistance line. This is aided by the fact that we now have both the Accelerator Oscillator and the Awesome Oscillator turning red, along with the Stochastics approaching overbought territory.
So to re-iterate, expect another test of 38.2% at 482 later today.