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For the second time in as many weeks the Bitcoin pullback that was expected has not materialized. BTC found support above $7,800 and its slide has been halted … for now.
Bitcoin Bounces Back
Yesterday NewsBTC reported that the correction had started and there was a strong possibility of Bitcoin dropping all the way down into the low $6,000s. After failing to break resistance at $8,300, following several attempts, BTC started a move downwards that looked pretty convincing. It reached an intraday low of just over $7,500 before turning around and marching back upwards. Crypto markets dumped around $15 billion as a result.
Since then BTC has recovered over 5 percent to climb back over $7,900 where it has been for the past few days. Clearly there will be another test of resistance over $8,000 again. Crypto trader ‘CryptoFibonacci’ has been looking at the charts and has found a few areas of support and resistance which line up with exponential moving averages;
“$BTC Daily Chart. Hugging the 10 ema, with support from the 20 ema hanging just under. If that 20 breaks, a retest of the flash crash low should happen. Still bullish the longer it hangs in this area as it builds a new base to move off.”
$BTC Daily Chart.
Hugging the 10 ema, with support from the 20 ema hanging just under. If that 20 breaks, a retest of the flash crash low should happen. Still bullish the longer it hangs in this area as it builds a new base to move off.#BTC pic.twitter.com/svGwkIP8k3
— CryptoFibonacci (@CryptoFib) May 24, 2019
Longer term moving averages such as the 50 and 200 day are used to predict longer term trends but these short ones can provide a good indication of support and resistance on a daily basis. On the one hour chart Bitcoin is posting lower highs as it tries repeatedly to break resistance;
$BTC – Trying for a fifth time to break through this flag resistance on the #bitcoin 1hr chart… pic.twitter.com/rspEsDUUfP
— BIG Chonis (@BigChonis) May 23, 2019
It does appear to have settled back in the channel and may well remain there for a few more days. Trader Josh Rager has previously commented on the 30% corrections that Bitcoin has gone through several times in the past. This year has yet to see one of that magnitude but it is still to be expected. From current prices a 30% pullback will send BTC back to $5,500. Rager added that these patterns provide a great opportunity to take profits from shorter term trading;
“$BTC: Reward of buying pullbacks. Previously examined how Bitcoin often experienced 30%+ pullbacks during last uptrend. But we didn’t discuss how buying these pullbacks can reap rewards. The average gain after a 30%+ pullback was over 153% profit before the next strong pullback,”
https://twitter.com/Josh_Rager/status/1131668130995085312
Many traders and investors are still waiting for this to occur as prices have been surging upwards without any significant retreat since early February. Last Friday’s flash crash knocked just 15 percent off Bitcoin’s price so a larger correction is still expected. At the time of writing Bitcoin had recovered from yesterday’s minor 5 percent pullback and was heading back to the $8k area once again.
Image from Shutterstock
