Bitcoin (BTC) price clearly broke through key support levels at $9,500 recently, as shown in my previous analysis and has since dropped to $7,700 losing almost 19% of its value within the last few days.
Bitcoin Daily Price Analysis
On the 1 day chart for XBT/USD, we can see that price levels broke down below the asymmetrical triangle within the last few days. Since then RSI on the daily has turned oversold as momentum plummets below the 20.00 region. Volume candles have created a descending formation visible from the lower lows on the peaks since the large volume spike seen at the end of June.
Price action currently sits between 38% and 23% Fibonacci levels. This indicates that the current market price trades close to key support, and if this support is broken the medium-term consensus would switch to bearish. Key support lies just above $7,000 meaning if this level is breached to the downside then the consensus switches to bearish.
Currently the medium-term consensus is still bullish and the current move to the downside is just a much-needed pullback in order to sustain the bullish growth BTC has seen throughout 2019.
Bitcoin 1-Hour Price Analysis
On the 1 hour chart for XBT/USD, we can see that a descending channel has formed as a result of the last move to the downside. Volume descending alongside descending price action highs leads me to believe further downside will take place over the coming days. I suspect price action will test a strong support line at $7,200 and could potentially go as low as $7,000. It’s likely there will be a bounce around this region providing adequate buying volume accompanies the bounce.
Key resistance levels to consider taking profit at if bitcoin does see a bounce around $7,000 are $7,650, $8,100, $8,400, and $9,000. These are sensible levels to consider taking profit at if you enter into the market around $7,000 in hopes of a bounce play.
It’s important to practice effective risk management such as scaling into the market in 10-25% increments as opposed to entering into the market in one 100% increment. Scaling into and out of the market allows you to manage risk by averaging in the best dollar cost average entry, or best BTC cost average entry. Trailing stop losses, and typical stop losses are mandatory for any trades whereby price action trades close to a critical support level that could dictate the consensus switching from bullish to bearish for Bitcoin.
Do you think bitcoin price will bounce around $7,000 over the coming days? Please let us know in the comments below!
Images via Bitcoinist Image Library, BTC/USD Charts via TradingView
Note:- This article is purely educational and isn’t to be construed as financial advice.
