Bottom line: Bitcoin continues to remain bullish over the long term as prices trade above 3850. The crypto is trading within a range between 8000 and 10000, and a break is required to push through resistance around 10500 levels.
Fundamental Outlook:
Dow Jones staged an impressive rally over +2.00% yesterday and closed near 25200 mark. Even today, futures have raised through 11250/60 as we write this article. Hopes of a vaccine for COVID-19, optimism over opening of economies, Fed measures taken over the past few weeks have been the driving factors behind this extended rally in May.
Having said that, the rising US-China tensions and economic damage by COVID-19 still remain in focus, and can quickly reverse the bullish sentiment in indices. Let us also remember the IMF forecast for Global GDP to shrink over -3% in 2020, before getting too optimistic.
AUDUSD managed to hit its peak for May at 0.6675, rising over +1.5% yesterday. It is trading very close to resistance around 0.6700 and is expected to push further. As the country re-opens post COVID-19 lock down, RBA prepares to keep monetary policy unchanged the next meeting scheduled on June 02. AUDUSD may come under renewed pressure if the RBA offers a dovish tone though.
Technical Analysis:
Bitcoin is seen to be consolidating within a potential triangle within 8000 and 10000 levels respectively. We still favour a bullish break out towards 10500 resistance before producing a meaningful corrective drop towards 6500 levels, going forward.
Bitcoin has earlier carved a higher low around 3850 and the crypto remains poised to break higher towards 13800 levels. The recent boundary that could be worked upon is between 3850 and 10500. Bitcoin may drop towards 6500 mark, which is fibonacci 0.618 retracement of the above rally.
Traders might be willing to take profits around the 10500 mark and then remain flat, waiting for a corrective drop lower. Bitcoin would provide yet another opportunity to go long at lower levels.
Prepared by
Harsh Japee, Technical Analyst.
Bitcoin Chart
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