Bitcoin/USD Price Analysis: 4th wave consolidation.
Bitcoin/USD Price Analysis: Deemed to be holding within a 4th wave correction. With support at 8177, we look for dips to be limited. Placing a stop loss below 8000 offers a favourable reward against risk setup
Market highlights from the last week
Friday 15th May: Cryptocurrencies lost ground on Friday with a stronger US dollar and fragile risk appetite curbing support
Monday 18th May: Cryptocurrencies dipped at Monday’s European open and were unable to regain traction during the day. Significantly, bitcoin was unable to take advantage of a much stronger tone towards risk appetite even when equities moved sharply higher
Tuesday 19th May: Cryptocurrencies moved higher in early Europe on Tuesday and bitcoin briefly hit highs around $9,900, but backed away quickly and retreated to near $9,650
Wednesday 20th May: Bitcoin dipped sharply amid evidence of a heavy sell order before rallying to around $9,600. Cryptocurrencies overall were unable to make renewed headway with bitcoin trading just below $9,500 as market attention focussed on movements in a bitcoin holding from 2009.
Thursday 21st May: After a fresh retreat to below $9,500, bitcoin selling gradually intensified with lows near $8,800 before a recovery to the $9,000 area
Bitcoin/USD Price Analysis
Let us have a look at the technical viewpoint.
Monthly: BTCUSD posted a 3850-low on the 13th March 2020. The week 4th of May high showed an initial recovery of 161%.
Weekly: Broken out of the expanding wedge formation to the upside. This pattern has a measured move target of 13880. Previous swing high is seen at 10500. Reverse trend line support at 9110.
Daily: We have a 161.8% extension level located at 9705 (from 3850-7469). From an Elliott Wave perspective, the last two weeks of consolidation could be seen as a 4th wave correction. The 261.8% extension, or 5th wave, is located at 13512. Support is seen at 8177
Outlook: Deemed to be holding within a 4th wave correction. With support at 8177, we look for dips to be limited. Placing a stop loss below 8000 offers a favourable reward against risk setup
Possible trade setup
Action: Buying at 8177
Targets: 9700 and 13880
Potential return on risk to first target: R7.5 (reward 1523 / risk 200)
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