Source: PaxForex Premium Analytics Portal, Fundamental Insight
Bitcoin has been racing higher together with equity markets amid economic optimism and more widespread adoption. After PayPal added support for Bitcoin purchases, several software companies buying Bitcoin as a store of value, and a Chinese bank selling $3 billion worth of bonds, Bitcoin appears to have turned the corner. While the long-term outlook does remain bullish, traders should expect a short-term pullback due to extreme overbought conditions.
The CCI has trended lower after crossing above 10, indicating a potential reversal. With equity markets at lofty levels, a sell-off is likely to spill over into Bitcoin and other cryptocurrency assets, but to a lesser degree than earlier in 2020 during the first wave of the Covid-19 pandemic. An attempt at the all-time high near 20,000 is a possibility, but the next few sessions carry a greater risk to the downside. Overly bullish sentiment adds to the threat of unexpected sell-offs despite improving fundamentals.
The forecast for the BTC/USD turned extremely bearish in the short-term. Price action is poised for a healthy pullback. The ascending Tenkan-sen and Kijun-sen are showing early signs of a pause in the trend. Bitcoin may retrace its advance into its upside sloping Ichimoku Kinko Hyo Cloud, where its horizontal support area is located. Will bears be able to force a sell-off, or can bulls charge ahead to 20K? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the BTC/USD remain inside the or breakdown below the 15,945 to 16,945 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 16,300
- Take Profit Zone: 12,030 – 12,670
- Stop Loss Level: 17,500
Should price action for the BTC/USD breakout above 16,945 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 17,500
- Take Profit Zone: 19,000 – 20,000
- Stop Loss Level: 16,945
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