Bottom line: Bitcoin long term structure remains bullish against 3850 lows. As expected, the crypto has resumed its intermediary counter trend towards 7200/7500 levels. Intraday rallies remain possible but they might remain capped below 12500 mark.
Fundamental Outlook:
Dow Jones had raised through 29200 levels over the last week before reversing sharply. The indice has dropped over -5.0% since then hitting 27200 lows today (futures). SPX500 has slipped over -6.0%, NASDAQ around -10.0%. It is alarming to note how quickly risk sentiment can change.
Global indices might remain under pressure over the next several weeks as risk aversion continues. The safe haven US Dollar and anti-risk Japanese Yen were seen to be the only beneficiaries. Investor sentiment might remain fragile as Asian Markets open today with Nikkei down over -1.50% already.
AUDUSD has also dropped below 0.7200 handle today and might continue further. The risk associated currency pair might remain under pressure as global equity markets turn lower. The exchange rate might face renewed selling pressure around 0.7300 handle.
Bitcoin has dropped close to -14.00% since the beginning of September 2020. The crypto has print lows around 9825 and might remain under pressure as the US Dollar strengthens. Investors might remain cautious as risk assets turn lower.
Technical Analysis:
Bitcoin bears seem to be back in control as they print 9825 lows today. The crypto had carved a potential top around 12500 mark on August 17, 2020. Further a lower high was produced 12065 over the last week as bears might be looking to push through 7200 handle.
Bitcoin has earlier dropped through 3850 lows in March 2020. Since then, the crypto has remained in control of bulls and managed to carve a series of higher highs and higher lows towards 12500 levels. The rally seems to be an impulse wave, which should be followed by a corrective drop ideally.
High probability remains that the proposed corrective drop might be under way since 12500 levels. It could drop towards 7200 levels, which is close to the fibonacci 0.618 retracement of the entire rally. Bulls might be poised to resume rally from 7100/7200 levels going further.
Most traders might continue to hold short positions initiated earlier and also look to add around 11300/400 resistance zone. The protective stops might be placed around 12500 with projected targets below 7200 levels respectively.
Prepared by
Harsh Japee, Technical Analyst.
Bitcoin Chart
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