Bottom line: Bitcoin continues its rally taking out 10350 levels as expected and discussed here. Bulls might be poised to take a break now.
Technical Analysis:
Bitcoin bulls hit yet another high above the 10350 resistance yesterday. This was expected and discussed over the last week. There is little doubt that bulls are firmly in control since 6425 lows, but we can expect a pullback/retracement lower before the next Bull Run could resume. Looking at the short term wave counts since 6425 print on December 18, 2019, Bitcoin seems to have now completed a lower degree Wave 1. The sub waves can be seen into 5 waves labelled and described here: Wave I, ii, iii, iv and v terminated at 7692, 6853, 9188, 8212 and 10383 respectively. A classic 5 wave pattern seems to be complete between 6425 and 10383 levels. Ideally a 5 wave move is followed by a 3 wave counter movement. Hence, we can expect a 3 wave counter trend drop from here, as Wave 2 unfolds. Also note that major resistance at 10350 has been taken out and that is also reason enough for bulls to take a break, before resuming again. Traders who went long earlier might be willing to consider booking profits around the current price action (10290/300) and allow the corrective drop to complete. On the other side, aggressive traders might be willing to initiate short positions here with a protective stop just above 10450 mark and potential target towards the 8000 levels respectively. Please note that the corrective phase might take several trading sessions to unfold and could be a sharp zigzag or a sideways flat. Conservative traders might be willing to remain flat until Wave 2 terminates lower and Wave 3 is ready to push higher again.
Prepared by
Harsh Japee, Technical Analyst.
Bitcoin Chart
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