Bottom line: Bitcoin long term structure remains bullish until prices stay above the 3850 mark. The crypto might be preparing for a meaningful corrective drop from current levels or after taking out 10500 resistance.
Fundamental Outlook:
Dow Jones, alongside the SPX500 had closed lower by around -1/5% yesterday, after news came in regarding the COVID-19 vaccine, stating the study is yet not enough to draw any conclusions. This is a classic example of how fragile and sentiment drive are equity markets, post COVID-19.
Fears still loom for a potential second wave of COVID-19 infections as US, Europe and Asian economies re-open after several weeks of lock down. Furthermore, the economic damage would require more efforts from Central Banks and is going to take a while to recover. Fed is already prepared to do what it takes to help the economy, hints Jerome Powell.
AUDUSD, driven by risk-sentiment also managed to rally since beginning of this week and had managed to register highs at 0.6585. This was backed by the Reserve Bank of Australia ruling out possibility of any additional measures required for now, expecting recovery in the latter half of 2020.
Technical Analysis:
Bitcoin remain in control of bulls over the long term but we are expecting a corrective drop towards 6500 levels, either from current price (9800) or from 10500 mark respectively. Please note, the drop is expected to be corrective and Bitcoin should be on its way higher towards 13800 thereafter.
Bitcoin seems to have produced an impulse wave as prices rallied from 3850 through 10000 levels in the past several weeks. Strong resistance lies ahead around 10500 levels and a break higher would be encouraging for further bullish setup. Having said that, a corrective drop towards 6500 levels would be seen as yet another opportunity to initiate longs.
Also note that fibonacci 0.618 support of the recent rally is seen around 6227 levels. If Bitcoin manages to drop towards the above zone, probability for a bullish reversal remains high, going forward. Most traders might take profits between now and 10500 levels and wait for a corrective drop to materialize.
Prepared by
Harsh Japee, Technical Analyst.
Bitcoin Chart
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