Analysis provided by Ashton Fraser, learn more about his trading strategies with the forex reversal indicator.
Bitcoin rises to a major resistance level before bouncing back down. I’ve performed the Fibonacci study from last week’s high at 605 to the low of the past fortnight at 555, as we can see on the BTC/USD hourly chart below (click to expand):
Now, I mentioned in yesterday’s analysis that, “…right now, price is at the 23.6% Fib level. If price manages to close above this level, we may see a rise to 38.2% at 575 later today.”
Which is what happened yesterday. Then, this morning, price continued to rise above 38.2% and hit the 61.8% level (marked in red), at around 590. Interestingly, the very next candle was a very bearish candle, long body, no wicks at all. It’s as though price hit a brick wall. Something we’re not really able to ascertain here.
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That is, until we zoom out and observe price action at a higher timeframe. Since, there’s another, more important factor at play here…
Check out the BTC/USD D1 chart below (click to expand):
As you can see I’ve performed the Fibonacci study from the last swing high at the start of March at just below 700 to the current low at 555.
Immediately we’re able to tell why 590 was such a resistance area, as it’s the first major Fibonacci retracement level on the Daily timeframe. Interestingly, the Accelerator Oscillator has just turned green, and with the Stochastics approaching oversold territory, we may see another test of 590 this week.
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