Forex Analysis:Bitcoin Poised To Correct Lower Towards 6300

Bottom line: Bitcoin long term structure remains bullish against 3850 lows. After having taken out resistance at 10500 levels, bulls might be preparing to take a break. The crypto might produce a corrective drop towards 6300, before resuming rally.

Fundamental Outlook:

Dow Jones is seen to be trading close to 26200 mark as we prepare the article, having recovered over 50% of the drop from early June. Despite Fed Stimulus and its commitment of doing more, the fact remains that US and World Economy is facing a prolonged recession. Over 38 million Americans have filed for benefits over job loss due to COVID-19 pandemic.

The forthcoming IMF forecast for Global Growth is also expected to be lower than its April outlook. Along with US and Europe, the emerging markets growth outlook has also deteriorated. Global indices have shown muted response over the rising COVID-19 infections (US, India and other countries) but this may quickly change.

AUDUSD, the risk-related currency pair gained yesterday as risk-assets and Global markets rallied. The exchange rate is trading close to 0.6950 mark and could continue further towards 0.6975/0.7000 levels. If risk aversion returns, AUDUSD may face renewed selling pressure around the above levels.

Technical Analysis:

Bitcoin bulls have remained in control since 3850 lows, and managed to take out major resistance around 10500 levels recently. Since then, the crypto has remained sideways and might drop towards 6300 levels, before resuming higher again.

Bitcoin rally between 3850 and 10500 seems to be an impulse wave. Ideally a corrective drop should unfold dragging prices potentially towards fibonacci 0.618 retracement (6300) of the above rally. High probability remains for a bullish bounce if prices reach the 6300/6400 zone.

Traders might have booked profits on the long positions taken earlier. Aggressive traders might want to initiate short positions around 9500/9600 levels, with protective stops above 10500 and potential target around 6300 respectively.

Prepared by

Harsh Japee, Technical Analyst.

 

Bitcoin Chart

 


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