By: Zev Spiro, CMT
February 06, 2018
Bitcoin (BTC/USD) Analysis:
The intermediate/primary trend is positive in BTC/USD defined by the bullish support line that began in March 2017, currently in the 6800 area. The predominant trend will remain positive as long as prices hold above trend support. Prices today broke below support on an intra-day basis, yet quickly recovered and are currently holding above trend support. The overall bullish trend, therefore, is still intact.
A large correction developed over the past seven weeks. The negative price action was needed to work off overextended conditions. Daily indicators are now oversold and prices are just above trend support, which may lead to a bounce in the near term. Moreover, a bullish candlestick pattern is likely forming today on the daily chart. The bullish candle will likely form if today’s close is above the 6800 area. The candlestick pattern would reinforce trend support and may lead to a bullish reversal in the near term.
Longs may initiate with a close today above 6800, as the overall trend would remain positive and an oversold bounce may develop from current levels. Protective sell stops may trigger with a daily close below today’s low at 6000. A daily close below 6000 would negate bullish implications of the candlestick pattern and may lead to further downside risk.
Chart: Below is a daily chart of BTC/USD illustrating the potential high volume bullish candlestick pattern that is forming at intermediate/primary trend support, and oversold readings in the Relative Strength Index (RSI) and Stochastics indicators.
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