The bitcoin price on Monday continued its crash course despite showing gains during the early Asian trading session. The digital currency attempted a go at its yearly low at ~$3,455 after reversing from its intraday peak at $4,115. That overall marked a circa 14 percent crash, setting standards for a further bearish action.
The BTC/USD index at press time is trading at 3581-fiat, eyeing potential support from 3508-fiat. The market has once again created a psychological bottom area inside a 3000-to-3500-fiat range. There is so far no evidence that could prove a potential [strong] reversal at any of these levels. The last time BTC/USD tested these levels as support was in September 2017. The technical dynamics were different then — the pair was trending above its 50-period, 100-period, and 200-period simple moving averages while forming higher highs.
In November 2018, however, the technicalities have turned upside down. The bitcoin price is now trending below its key moving averages, forming lower lows. The question remains whether the levels that were strong supports during an uptrend should remain equally robust when the asset is on its way down.
Fundamentals are the Only Savior
The bitcoin technical indicators in the present could serve the purpose to instruct traders about potential entry and exit positions. They won’t be able to provide any long-term prospects unless the market truly establishes a bottom and rebounds with strong volume. Analysts predicting bottoms could at most be patting their own backs for making a right “guess,” not a prediction based on market demand.
The fundamental aspects of bitcoin, meanwhile, continue to be strong owing to the impending launch of Bakkt, an ICE-backed crypto exchange, and the potential approval of a bitcoin ETF by the last quarter of 2019. These are among the only remaining factors that should keep the investors’ interest alive in a bleeding market.
For day traders, the chart above could be relevant. The BTC/USD rate is visibly inside a descending parallel channel (and a long-term falling wedge formation discussed in our previous analysis). We’ll stick to a parallel channel in this report to understand the near-term dynamics.
The bitcoin price could restest the channel support for a potential pullback towards 3500-fiat, an interim long target, followed by a run towards the channel resistance as the primary upside target. An intra-channel long position should be coupled with a stop loss target 4-pips below the entry position to safeguard the trade.
Similarly, there is a high probability that BTC/USD will reverse from the channel resistance, then attempt a breakout action towards 4374-fiat, the interim upside target. A short position towards 3508-fiat upon an uptrend reversal should promise some decent profits. Nevertheless, maintaining a stop loss order 4-pips above the entry position will reduce the overall risk from the trade.
Trade safely and try not to catch a falling knife.