Bottom line: Bitcoin long term structure remains bullish against 3850 lows since March 2020. The crypto might be preparing to push lower towards 7200/8000 over the next few weeks. Bears are looking poised to stay in control from here.
Fundamental Outlook:
Dow Jones had rallied yesterday to close around 28674, up above +0.88%. The rally was backed by an upbeat ISM manufacturing PMI, printing 56.00. This clearly suggests that the manufacturing sector continues to expand. Over the next few sessions though, the indice might face renewed selling pressure around 29000/200 mark.
AUDUSD had print above the 0.7400 mark yesterday before pulling back. The exchange rate has dropped to 0.7355 as we prepare to publish the update, and might come under further pressure as Q2 GDP disappoints.
It has contracted by -7% against expectations of -5.9%, pushing the economy into a recession. Further the Reserve Bank of Australia has kept the official cash rate (OCR) unchanged to 0.25%. Adding further pressure on the exchange rate are the rising trade tensions with China.
Bitcoin had peaked through 12473 highs on August 17, 2020. Since then the crypto has dropped to 11100 lows before finding some support. The crypto trades around 11800 mark as we prepare this update, and might come under further pressure if US Dollar gains over the next several weeks.
Technical Analysis:
Bitcoin might be setting up for the next leg lower towards 7200/8000 from current price action (11700/800) in the next several weeks. The crypto had peaked just below 12500 mark around mid-August 2020 and bears might have carved a lower high around 11700/800 mark.
Bitcoin has produced a religious rally since March 2020 lows around 3850 levels. Also note that the structure might be an impulse wave, which should be followed by a corrective ideally. A drop below 11100 mark would confirm that the corrective wave is underway.
Most traders might be willing to initiate fresh short positions from current levels, with protective stops above 12500 mark and potential targets below 7200/8000 respectively. Only a break above 12500 would change the above bearish structure.
Prepared by
Harsh Japee, Technical Analyst.
Bitcoin Chart
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