The gains Bitcoin made during the Friday and weekend trading session fizzled at the beginning of this week.
The digital currency’s recovery lost steam after establishing an intraday high at 3640-fiat, now thrice in December. It dropped as much as 4.4% on Monday, confirming a weak bull sentiment near the said resistance area. At the time of this writing, Bitcoin has located support at a near-term rising dotted trendline and is trading at $3,420.
After zooming out the chart, the BTC/USD rate can be seen trending inside a circa $450-wide descending channel depicted in purple. Traders who believe that price will remain inside the channel can make bets when the pair fluctuates within the given parameters. For instance, the BTC/USD at press time is reversing from the upper trendline, creating a potential short opportunity towards the lower trendline. Similarly, a bounce back from lower trendline create a long opportunity towards the upper trendline.
If readers are willing to bet on the descending channel pattern, then it would be advisable to maintain a stop loss order just $10 against the direction of the target. For instance, in a long position, placing a $10 stop loss below the entry level would minimize risks in case the price reverses bias. Similarly, in a short position, placing a $10 stop loss above the entry point would maintain the overall risk management strategy.
Considering the same descending channel pattern, traders can define a breakout strategy as well. A break above the upper trendline could allow traders to open a long position towards 3713-fiat, a near-term term upside target that would also mark the making of an inverse head-and-shoulders pattern. Like always, maintaining a stop loss just $10 below the entry position would minimize losses in the event of a pullback action.
Similarly, a break below the lower trendline would bring 3000-fiat in view as the potential downside target. A short position could be opened on a hint of high volume near the lower trendline while setting up a stop loss target just $10 above the entry level.
According to the daily chart, Bitcoin is pretty much inside a strong bear bias. It would be unlikely in near-term to grow out of it, considering the next long-term target to establish a moderately bullish bias is hanging with the 50-period moving average in blue. Its gonna be quite a jump and forming such an inverse H&S pattern looks difficult at this moment.
Similarly, the RSI indicator has overstayed its welcome inside the oversold territory. The BTC/USD pair could see it recover, at last, but it would be unlikely for it to set its upside targets anywhere beyond 5000-fiat as of now – unless the end of this year.
Next year’s strong fundamentals that would come with Nasdaq-backed bitcoin futures, ICE-backed Bakkt exchange and a possible approval of VanEck’s Bitcoin ETF could prove bullish for bitcoin in long-term.
Trade safe, anyway.
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