Bitcoin Market eyes choice between $8,500 and $7,000
The technicals suggest a large price move is on the cards imminently for the bitcoin market.
Bitcoin lost ground overnight falling to the $7,600 level, there is now a chance of a further drop to the $7,000 area and below, or a rebound to $8,500 and beyond. However, crypto spring has sprung and overall traders may consider being out of the market more risky than being in it.
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The parabolic run up experienced over the past two weeks finally appears to be losing steam. Volumes have dropped, and the last three days have been red candles. Bitcoin appears to have put in a double top at the $8,300–$8,400 area, and will need to push higher to break the pattern and prevent bears from taking control of the market and sending it much lower. The volatility of recent days – especially the flash-crash to $6,200 – may serve as a precedent and provide an expectation or target for sellers.
Diminished bull case
On the four-hour chart, a promising inverse head-and-shoulders formation appears to have been invalidated, reducing the case for a push to $9,000. The most likely scenario was therefore a short-term pullback at the very least, which indeed happened yesterday evening with the fall to $7,500. The question now is whether this enough, or whether more is to come.
Looking at the bounce from the low of $6,178 to the subsequent bounce to a high of $8,300 (the week’s closing price), we can see that yesterday’s pullback almost perfectly matches the 38% fibonacci level.
On a more positive note, the overall parabolic trajectory still holds good, for now, though a close below $7,500 would invalidate that. Dips have been bought on every timeframe for the past couple of weeks, with demand below $6,000 proving particularly strong. Overall, sentiment is good and there is renewed and growing interest in crypto once again. It therefore seems likely that any fall would be a short-term development, and that traders may consider being out of the market more risky than being in it.