Bitcoin price analysis: can we close above the wedge?
Bitcoin/USD price analysis A weekly close above 9195 is bullish. A clear break of the Expanding Wedge formation. Technical target 13880
Market highlights from the past week
Friday May 8: US jobs data was horrific but slightly better than consensus forecasts with non-farm payrolls declining 20.5 million and unemployment rising to 14.7 per cent.
Monday May 11: There was further choppy trading during the day with some net Bitcoin support from the ability to hold above Asian lows.
Tuesday May 12: Narrow trading ranges continued on Wednesday with Bitcoin holding near $8,900 as the dip in US equities had only a limited impact.
Wednesday May13: After a small retreat in early Europe, Bitcoin moved significantly higher with a break above $9,000 leading to further buying interest and a peak above $9,250 around the New York close.
Thursday May 14: Bitcoin made significant headway ahead of the New York open and pushed to highs above $9,900. There was, however, no attempt at testing the key $10,000 area and prices drifted lower despite underlying support when Wall Street turned positive.
Bitcoin/USD price analysis
Let us have a look at the technical viewpoint.
Monthly: a strong recovery from the March base at 3850 (161.66 per cent from base to the May 7 high trade). Technically, there is little to take from this timeframe.
Weekly: looks to have formed an Expanding Wedge pattern that has a bias to break to the upside. Although levels above the trend of lower highs (at 9195) found sellers last week, we have seen resumed buying interest. A weekly close above this level is important for the long-term outlook. A positive close and the measured move target is the start of the wedge at 13880.
What is your sentiment on BTC/USD?
Daily: a 261.8 per cent extension level from 3850-7523 is seen at 13512, just inside the expanding wedge target. If we see continued upward momentum, this could be seen as the fifth wave (Elliott Wave formation).
Outlook: Bitcoin/USD looks to have dropped its correlation with US indices. A weekly close above 9195 is bullish. What is then common, is for a retest of the breakout level. Going long (buying) at this point offers a solid reward against risk setup.
Possible trade set-up
Action: On a weekly close above 9195, we look to buy a retest of 9195
Targets: 13500 and 13880
Potential return on risk to first target: R2.97 (4305 / risk 1445)
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