Source: PaxForex Premium Analytics Portal, Fundamental Insight
Bitcoin continues to rally and is now approaching its highest level in over three years, which stands at 13,821. The 14,000 hurdle presents the last significant resistance to tackle its all-time high near 20,000. PayPal allowed users to transact in Bitcoin, opening the gates to more retail flows. Software company Square bought $5o million worth of Bitcoin as it diversifies its capital base, and many wonder if more companies will view the largest cryptocurrency as a store for value.
Given the 87% rally in 2020, the 14,000 level represents an attractive profit-taking opportunity. Short-term momentum faces challenges of extreme overbought conditions, with the CCI above 100 and declining. The Ichimoku Kinko Hyo Cloud remains narrow and in a sideways trend. A sell-off in this cryptocurrency into its ascending Kijun-sen can rectify overstretched levels in the short-term, from where it may correct into the Senkou Span B of its cloud. A short-term sell-off would support the dominant long-term uptrend.
The forecast for the BTC/USD turned bearish in the short-term, with selling expected between 13,500 and 14,000. Breakouts often get rejected on the first and second attempts, and a repeat of the March sell-off when professional investors sold Bitcoin to shore up capital during the equity market sell-off may repeat itself. This time, retail traders may pull the trigger. Will bears deliver a blow to the bullish advance? 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 13,500 to 14,000 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 13,620
- Take Profit Zone: 10,760 – 11,185
- Stop Loss Level: 14,260
Should price action for the BTC/USD breakout above 14,000 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 14,260
- Take Profit Zone: 14,620 – 15,000
- Stop Loss Level: 14,000
Open your PaxForex Trading Account now and add this currency pair to your forex portfolio.
