Analysis provided by Ashton Fraser, learn more about his Forex Reversals trading strategies.
This morning, Bitcoin, despite all the bad news of recent days surrounding the currency, has been gearing north for a number of consecutive hours now. Will the trend continue?
Let’s take a closer look at the hourly chart on BTC/USD, (click to expand).
I’ve done the Fibonacci study from last week’s high at 630, to yesterday’s low of 430.
Immediately it’s clear how the 50% retracement was an important area, providing resistance on two separate occasions yesterday, circled in blue. However it wasn’t able to contain price for too long, as, after a period of consolidation, price made another push up. Look at how strong the Stochastics were, and the Awesome Oscillator was also very bullish. The fact that there hasn’t been a single red Awesome bar in almost 24 hours, is a testament to the strength of the bulls.
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However, all good things must come to an end, and what we see now is precisely what I expected.
Look at how price has stopped exactly at the 78.6% Fibonacci retracement level. This is the highest Fib level of major importance, and it’s of no surprise price has paused there at 587. Not only because it’s a Fib line, but also because the previous candle closed significantly above the upper Bollinger line, whilst the Stochastics are extremely overbought, plus with the Accelerator Oscillator having turned red a few candles ago, we can expect price now to drop some pips over the remainder of this morning.
I anticipate price to hit the 61.85 Fib level of 553 later this morning. However, this isn’t necessarily the end of the trend.
Zooming out on the hourly chart, we can see how there is some major resistance further upfield, as can be seen on the red trendline I’ve drawn below (click to expand)
If the current bullish trend continues, expect that line to play very important role later this week or next.