Analysis provided by Ashton Fraser, learn more about his Forex Reversals trading strategies.
Bitcoin has been hovering around a key support/resistance area this weekend. How long before a new trend emerges?
Not long I’d say. Take a look at the BTC/USD H4 chart below (click to expand).
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I’ve done the Fib study from the high on the 23rd of Feb at 630, until the low of the 25th at around 430.
Since then, there’s been one particular line to which price has been gravitating. The 61.8% Fibonacci retracement level. Even as I type this analysis, price is exactly at the 61.8% level at 553. Right now it doesn’t seem to be doing much. In fact, the past half a dozen or so candles have closed there or thereabouts ellipsed in blue). This has resulted in a tightening of the Bollinger bands, and the so called squeeze is well underway, so much so, that middle Bollinger line has now amalgamated with the aforementioned 61.8% Fib level, resulting in an even stronger sticking point.
It’s always an arduous task to determine when the squeeze will come to an end, but the technicals are telling me it should be too far away.
We can see how now, both the Accelerator Oscillator and Awesome Oscillator have turned red, indicating some bearish strength, whilst the Stochastics, even though are still pointing north, are getting rather close to overbought territory. Hence, I’d expect price to slowly drop until the 50% level at 530 by tomorrow, where price has already reacted to twice over the past couple of days.