Bottom line: Bitcoin long term structure remains bullish against 3850 lows. Over the short term though, the crypto remains vulnerable for a corrective drop towards 6300/6400 levels. We can expected the rally to resume thereafter.

 Fundamental Outlook:

Dow Jones rallied more than +2.0% and managed to close at 26624 mark yesterday. Futures are trading higher today around 26880 levels as we prepare to publish. The recent optimism might be short lived as large banks including Citigroup and J P Morgan Chase hint the worst is yet to come.

COVID-19 infections continue to rise US, South Africa and India as many states rollback to lock down. Risk sentiment/Global Indices continue to rise as well with Dow Jones leading the way this week. We would again warn readers to exercise caution over the increased optimism.

AUDUSD, the risk-related currency pair, also managed to inch higher towards 0.7018 this morning. It has been easing off since then, and is expected to come under further pressure. The rising tensions between the US and China might drag the exchange rate lower. Also, if risk aversion returns, the currency might face further selling pressure.

Technical Analysis:

Bitcoin has been drifting sideways since printing 10500 levels in early June 2020. The crypto remains vulnerable for a sharp drop towards 6300/6400 levels, before the rally could continue further. Bears might be inclined to take control from here.

Bitcoin rally between 3850 and 10500 seem to be an impulse wave. Ideally, an impulse wave should be followed by a correction. It is quite normal for the corrective way to drop towards fibonacci 0.618 retracement of the previous rally.

High probability remains for Bitcoin to produce a bullish bounce if prices manage to drop towards 6300/6400 mark. The crypto could ten resume its rally towards 13800 and higher, going forward. Most traders might be willing to buy lower again.

Prepared by

Harsh Japee, Technical Analyst.

Bitcoin Chart

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