Bitcoin has recently displayed abnormal volatility over the past few days. After soaring roughly +38% over ten days Bitcoin took a short term downside swing. This ten day period of green candles for Bitcoin is significant as this has only occurred a few times in Bitcoins history. A very bullish movement indeed, but how does it relate to the current market structure?
Below we have pictured a daily time frame snapshot of Bitcoin. The ten day run up put pricing well above previous horizontal resistance tops. This run up was not enough to pierce a previous dynamic resistance however. The downward sloping red line is used to project “dynamic resistance” for future price action. This line is projected by connecting the previous swing highs. In doing so, the line should continue indefinitely as long as it is respected. This is the basic idea of trendline trading.
After the initial run up that broke the descending white trend line, price rallied to the next dynamic resistance line we just mentioned. It faced rejection and fell a few percent after touching the downtrend line.
Here we observe the 4h timeframe. Price has seemingly found support along the 100 exponential moving average or EMA. If price can sustain above the 9 EMA in the next few candlesticks to come that could entail the bullish momentum may continue.
Zooming in a bit further to the 1hr time frame we can see that price has shot over the 100 EMA. The bulls are fighting hard to bring the price to a sustainable point above previous resistance points. On August 4th (as pictured in the chart below) price attempted to break over the 100 EMA but failed. This is the second attempt to pierce and sustain the 1hr 100 EMA.
If price fails to sustain above its downtrending dynamic resistance line we can plot two possible support zones for a retrace. The first ranging from $39,218-$40,0014. These values stem from the 1hr 9 and 100 EMA’s. If support isn’t found in the first purple shaded area we can look for the next level of support between $36,419 – $37,515.
If price can not sustain above these levels, we may see lows back to the upward sloping blue line previously used as dynamic support around $34,000 levels.
Interestingly enough we find that this price struggle is also around the .0382 fib level indicated by the yellow zone. A sustained breakout above these levels would be excellent news for Bitcoin bulls.
A break above the levels mentioned could be considered bullish indicators for the longevity of the much anticipated 2021 bull run. It is important to take note of such key levels in Bitcoin’s price action. Judging any intermediate short or long calls would be difficult, yet certainly there are trading opportunities amongst this volatility.
We have only used a few indicators in this update and have relied mainly upon price action analysis. Of course no matter how many indicators or confirmations we have before us, nobody can be certain what the market will do tomorrow or even five minutes from now. There are plenty of investment options and opportunities in the cryptocurrency markets. Check out our available courses to learn more about technical analysis so you can take advantage of Bitcoin’s price movements.
By viewing any material or using the information within this publication you understand that this is general education material and you can not hold any person or entity responsible for loss or damages resulting from the content or general advice provided here. Trading cryptocurrency has potential rewards, but also potential risks. You must be aware of the risks and be willing to accept them in order to invest in the markets. Only trade with funds you can afford to lose. This publication is neither a solicitation nor an offer to buy/sell cryptocurrency or other financial assets. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in any material on this website. The past performance of any trading system or methodology is not necessarily indicative of future results.
Written by Edward Gonzales © Crypto University 2021