Bottom line: Bitcoin long term up-trend remains intact until prices stay above 3850 support. Bulls have managed to take out resistance at 10500 yesterday. Bitcoin might come under pressure as bears prepare for a corrective drop towards 6500 levels.  

Fundamental Outlook:

Dow Jones continued its winning streak yet another day, closing around +1% higher at 25729 levels. The one big question every investor wants to know is this: “What is driving this rally?” Over 40 million jobs have been lost since the COVID-19 pandemic broke out. US-China tensions have been on the rise lately, adding further is the current protests in the US that are turning violent over the death of George Floyd.

The closest answer could be Investor Psychology. Hopes and optimism over the Fed Stimulus in recent weeks, opening up of economies post COVID-19 lock down, a V-Shaped economic recovery starting Q3-2020 are some factors potentially driving the current rally. Are we being too optimistic, too early?

AUDUSD, related with risk-sentiment managed to stage an impressive rally over the past few sessions and hit 0.6982 today. The GDP figures came in accordance with expectations shrinking to 1.4% over 2.2%. It would be interesting to see how AUDUSD reacts to the next major hurdle at 0.7030.

Technical Analysis:

Bitcoin bulls finally managed to take out resistance at 10500 mark yesterday. This confirms that long term trend is up and that bulls are here to stay for long. Having said that, the crypto might be preparing for a corrective drop towards the 6200/6500 zone, before the rally could resume.

Bitcoin rally from 3850 through 10500 could be seen as an impulse wave, which should be followed by a corrective wave lower. The fibonacci 0.618 retracement of the above rally is seen towards 6200 levels and high probability remains for a bullish resumption from there.

Traders might have opted to book profits yesterday around the 10400/500 mark. It could be safe to remain flat for a while and allow for a corrective drop towards 6200/6500 levels, going forward.

Prepared by

Harsh Japee, Technical Analyst.

Bitcoin Chart

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