Analysis provided by Ashton Fraser, learn more about his trading strategies at Forex Reversal.
Bitcoin has this morning made a significant drop, finally ending the Bollinger Squeeze we talked about earlier.
Lets take a closer look at the hourly chart below (click to expand).
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We can see how price had just closed above the Upper Bollinger line this morning (marked with a blue arrow), reaching a high of 616. Since then, it’s been falling pretty fast. The immediate candle after the bullish one that closed above the upper Bollinger dashed right down below the middle Bollinger line, a clear indication of a break.
That, given the fact that Stochastics had now crossed over, heading South whilst being undersold, plus both the Accelerator and Awesome Oscillators changing red, told us that a strong bearish trend was on the way.
Price dropped all the way until 575, where it’s now hit some support and rose until the 61.8% Fibonacci level, literally to the pip (as happens so often). However, Stochastics, AC and AO were all still very bearish, hence price immediately fell down again, stopping at the previous low at 575.
In fact, 575 has been tested already three times in the space of a few short hours, thus giving more credence to this support area, however it’s unclear how long it will be able to hold at this level, as if we analyze higher timeframes, there are more hints of bearishness.