BTC/USD Daily Chart (Log)
Technical Outlook: Earlier this month we documented the objective break of the January opening-range in Bitcoin prices as the decline was approaching initial support targets. We were looking, “for signs of a near-term exhaustion low in price for the rebound – but ultimately looking lower.”
Indeed price did rebound as high as 13052 before reversing sharply with the decline now once again approaching key confluence support at 8337-8643– a region defined by the 61.8% retracement of the July advance, the 100% extension of the decline off the record highs and basic slope support off the late-December low. Resistance remains with the monthly opening range lows at 12801 with bearish invalidation now lowered to the slope confluence at~14400/44 (note the monthly / yearly open at 13880).
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BTC/USD 240min Chart (Log)
Notes: A closer look at price action sees Bitcoin breaking below a near-term consolidation pattern with the decline now approaching the January lows / 61.8% retracement of the September advance at 9300/03. If this break is legit, near-term rallies should be capped by 11160 with a break lower targeting 8643-8729 backed by the lower parallel / 8337– area of interest for near-term exhaustion / long-entries IF reached.
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Bottom line: I’ll favor fading strength while below 11160 for now targeting structural support. A break below this near-term downslope would be needed to suggest a much larger correction is underway with such a scenario eyeing subsequent support objectives at the 200-day moving average, currently around ~7675.
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Bitcoin IG Client Sentiment
- A summary of IG Client Sentimentshows traders are net-long Bitcoin- the ratio stands at +3.08 (75.5% of traders are long) – bearishreading
- Long positions are 3.0% higher than yesterday and 4.2% lower from last week
- Short positions are 2.4% higher than yesterday and 0.8% lower from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Bitcoin prices may continue to fall. However, traders are more net-long than yesterday but less net-long from last weekand the combination of current positioning and recent changes gives us a further mixed Bitcoin trading bias from a sentiment standpoint.
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Other Setups in Play
– Written by Michael Boutros, Currency Strategist with DailyFX
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