TL;DR consolidating above the 23% fib – for now…
When bitcoin failed to hold $9k, it was clear that the parabolic advance was over. Many analysts have cautioned that bitcoin is due a heavy correction. Parabolic rises are unsustainable, often giving up the majority of their gains. In this instance, that could mean a fall back to around $6,000.
There are many reasons why $6k is of interest:
- The parabolic rise started in earnest just below this level
- $6k is the zone of strong support established in 2018
- The 100-day moving average is now approaching this area
- It marks the 50% fib level, from the low of December 2018 to the recent high of $9,100.
Overall, $6k should prove excellent support, with multiple converging signals suggesting that price – if it goes this low – will have a tough time breaking lower. In other words, it may – may – be a good buying opportunity.
So far, though, this hasn’t happened. Instead, bitcoin appears to be consolidating above the 23% fib level, which lies at $7,700. We have bounced off this line multiple times on the daily. At the same time, bulls are struggling to push bitcoin above $8k. There is a narrow range within which BTC is trading and when it breaks – one way or the other – it will likely break hard.
To the upside, we’re looking at $9k+ and the recent high, ideally looking to break that and continue the rally higher. To the downside, we have $6,800 (the 38% fib and top of the 2018 support zone) and then $6,000.
The 50-day MA is advancing higher, and after our Golden Cross earlier this year we would expect a retest of that. It may help provide further support. The fall may never happen – and remember, when ‘everyone’ thinks something is going to happen in a market, the opposite happens. However, the picture as things stand is broadly bearish, in the medium term.
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