Bottom line: Bitcoin long term structure remains bullish as long as prices stay above 3850 mark. In the short term, the crypto may be preparing to drop towards 6300/6400 levels, before bulls are back in control.  

Fundamental Outlook:

Dow Jones had dropped close to 6% over the last week, closing in at 25540 mark. Other Global Indices also followed lower as risk sentiment reversed sharply, NASDAQ being the only exception. Talks over further stimulus measures, has boosted risk assets over the last 2 trading sessions, as Global Indices recover over 50%.

Believe it or not, this is a classic example of how fragile investor psychology remains. Nothing has changed with respect to the looming Global Recession and re-surging second wave of COVID-19 infections. It is just a matter of time for potential reversal across Global Indices, going further.

AUDUSD, the risk-related currency also dropped from its peak 0.7064 since June 10, 2020. The bounce early this week looks temporary as COVID-19 infections erupt. The currency exchange rate shall also be taking cues from the Employment data to be out tomorrow. Over 125K job losses are expected in May and Unemployment Rate climbing to 7%.

Technical Analysis:

Bitcoin bulls have remained in control since 3850 lows and managed to take out resistance at 10500 recently, falling in line with expectations. The crypto might be preparing to produce a counter trend drop towards 6300 zone, before resuming its rally towards 13800 and further.

Also note that fibonacci 0.618 retracement of the previous rally between 3850 and 10500 falls around 6300 mark. High probability remains for a bullish bounce if prices manage to reach those levels. The next potential resistance in line would be 13800 mark.

Traders might have booked profits on the long positions taken earlier around 10500, as they wait for a corrective drop towards 6300 levels. Bulls are expected to be back in control thereafter, pushing Bitcoin through 13800 resistance.

Prepared by

Harsh Japee, Technical Analyst.

Bitcoin Chart

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