After days of constant consolidation, Bitcoin finally manages to break free from the restrictions imposed upon it by certain support and resistance zones.
Let’s take a closer look at the latest BTC/USD Daily chart below (click to expand):
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I’ve performed the Fibonacci study from the low of the month at 343, until the high of the month at 545.
Remember during this week we have been discussing the ranging activity of Bitcoin (marked with a red ellipse), and how it’s presented us with such choppy price action, such as dojis (candlesticks which open and close where they started), spinning tops (candles which have short body lengths yet possessing relatively long upper and lower wicks of equal length), all whilst meandering between two support and resistance lines, namely the 23.6% and 38.2% Fibonacci retracement levels at 497 and 467 respectively.
This has been happening all week, I felt this would be the case, when I mentioned at the start of the week, “There is a clear struggle between the bulls and the bears, each of them attempting to set the tone for this coming week.” Hence once again this morning, price rose and tested the 23.6% Fib at 497, before being rejected – this falling down with vigour; enough vigour to break below the 38.2% Fib, ultimately reaching the 50% at 444. Looks like the bears have won this week, although it’s not much to write home about – it’s hardly a crash. The question now is, will price manage to break 50% at 444?
Well, to answer that question we need to seek corroborating technicals. I feel there could well be a break below 444, for a few reasons, since we have the Stochastic Oscillator heading south from an overbought position. We also have the Accelerator turning red, along with the Awesome Oscillator. I really doubt 50% (444) can hold for much longer, and if we don’t see a drop to the 61.8% Fib by the weekend (marked in blue), I’d be surprised.