CAUTION - Bitcoin at a Cross-Roads
Looking at the daily chart there two significant elements to pay attention to:
(1) Support Zone ($7100 - $ 5800) - this price range has been tested a number of times and a clear break below this zone could see us drop to around $4200 (1.138 Fib extension) or even $2400 (1.272 Fib extension).
(2) Resistance Trendline - Also tested a number of times. A clear break may be the catalyst for a bullish rally to $10 000.
We really are at a cross-roads as I expect we will get a much clearer indication of medium term price direction depending on which breaks first - support or trendline.
Given that we are currently in a bear market, I believe that a downside break is more likely. Furthermore, on the hourly timeframe we are seeing reversal patterns repeatedly fail to reach target - a strong sign of prevailing weakness. See most recent head & shoulders failed to reach target (green box).
Conclusion - I would avoid buying Bitcoin at current levels. I would rather wait to buy after a clear break above trendline and a new bull trend looks likely. Should support break I will be looking for trend reversal patterns to build new long positions.
(1) Support Zone ($7100 - $ 5800) - this price range has been tested a number of times and a clear break below this zone could see us drop to around $4200 (1.138 Fib extension) or even $2400 (1.272 Fib extension).
(2) Resistance Trendline - Also tested a number of times. A clear break may be the catalyst for a bullish rally to $10 000.
We really are at a cross-roads as I expect we will get a much clearer indication of medium term price direction depending on which breaks first - support or trendline.
Given that we are currently in a bear market, I believe that a downside break is more likely. Furthermore, on the hourly timeframe we are seeing reversal patterns repeatedly fail to reach target - a strong sign of prevailing weakness. See most recent head & shoulders failed to reach target (green box).
Conclusion - I would avoid buying Bitcoin at current levels. I would rather wait to buy after a clear break above trendline and a new bull trend looks likely. Should support break I will be looking for trend reversal patterns to build new long positions.
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