Source: PaxForex Premium Analytics Portal, Fundamental Insight
Bitcoin crashed more than 10%, wiping billions from portfolios globally, on the day El Salvador made it a legal tender. Protest erupted across one of Latin America’s poorest nations, but the situation stabilized throughout the day. It will take time for the Bitcoin experiment to yield results, but high transaction costs and slow processing times remain an issue. Following the collapse in price action, selling pressure faded, and it offered patient investors a potential buying opportunity.
Price action enjoyed a stellar advance after dipping below 30,000 and was overdue for a correction. While the BTC/USD may challenge its reaction below 43,000, longer-term bullish factors remain intact. As Bitcoin tumbled, El Salvador bought 150 Bitcoins, facing harsh criticism by the opposition. The country now holds 550 Bitcoins and claims it saved $1M in printing costs for fiat currency. Concerns remain about what will happen if Bitcoin faces more downside pressure, with the IMF voicing concerns over making it a legal tender.
The forecast for Bitcoin is cautiously bullish following its 10%+ drop, but traders should exercise caution and patience, as volatility is likely to increase. More downside is possible before price action attempts another advance, driven higher by its ascending Ichimoku Kinko Hyo Cloud. This cryptocurrency pair presently trades between its flat Kijun-sen and Tenkan-sen, and the CCI plunged into extreme oversold territory. Traders should wait for a breakout before buying Bitcoin. Can bulls prevail and pressure the BTC/USD back into its horizontal resistance area? 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 breakout above the $43,900 to $46,700 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ $45,070
- Take Profit Zone: $51,025 – $52,870
- Stop Loss Level: $42,800
Should price action for the BTC/USD breakdown below $43,900, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ $42,800
- Take Profit Zone: $37,315 – $39,860
- Stop Loss Level: $43,900
Open your PaxForex Trading Account now and add this currency pair to your forex portfolio.