In yesterday’s market session, bears came charging down on Bitcoin causing a 1.66 percent drop in the price and pushing it below the $240-mark.
At $239.03, Bitcoin is now in close proximity to the support provided by the horizontal line and is currently sustaining at the 30-day SMA OF $236.9643.
Image: https://www.tradingview.com/x/e4VT70QL/
However, the correction is not surprising given the number of resistances that Bitcoin has to cross if it is to reach its target of $260. But, is this correction an opportunity that market participants should pounce on, or is it signaling a short-term trend reversal? Let us find out through the latest technical considerations obtained using the daily BTC-USD price chart.
Bitcoin Chart Structure – Bitcoin’s faltering is expected to cease as it approaches the support of $235. Buyers should make a re-entry at those levels otherwise this drop will escalate into a serious bearish grip on Bitcoin.
Moving Average Convergence Divergence – As the price takes a hit, so does the MACD. On its upward journey, MACD slowed down as profit booking dragged the Bitcoin market. The Histogram declined to 3.4143, MACD reported -2.8516 and the Signal Line advanced to -6.2659.
Money Flow Index – The MFI can be seen easing from its recent highs and is now at 64.1148.
Relative Strength Index – The RSI value of 49.5632 can be safely ignored as it offers no value to the analysis.
Conclusion
This is a healthy correction that market participants should use to create light long positions in Bitcoin. Place a stop-loss below the support mentioned and liquidate partially at each of the resistance levels.
In case, bears up the ante and breach $235 decisively, exit all the long positions and wait for $225 to be tested, which is also close to the 23.6% Fibonacci retracement.
Volatility will remain low, so trade easy.