Will Bitcoin play with fire three days in a row?
Yesterday we talked about trends and today we can focus on just the local trend and the challenge that Bitcoin faces for the third day in a row.
After a huge 64% advance from $40,804 to $66,958, Bitcoin has slowed down a bit. We had an initial pullback of 14%, in which Bitcoin lost about $9300. After that, Bitcoin responded with a 20% from the recent lows to make a new ATH at $68,958 (Bitfinex).
Finally, yesterday we have hit a peak low so far from the ATH making it a 15% loss, which is about $10,600.
If the Support Fails
So the question becomes, what happens if the Support fails? It would not be uncommon to Sweep the Lows and liquidate high leverage traders but push just low enough to convince traders the trend is over, This usually happens on a quick wick candle and not a slow and sad demise – like this one.
Like all things trading – we look for the next area of Support and what that means for the structure of our Local Trend. A Breach of $57,606 would indeed invalidate this local trend but that also is not the end of days – there are plenty of trends that see a wick below the trend but go on to recover at the close of the daily candle.
That being said, the horizontal is the last line of defense as far as the local trend is concerned. If that were to break, then retesting a previous Swing High is not out of the question. That zone is the all too familiar $52,000 – $53,000 Zone we have spoken about before.
Of course, there is no telling whether that Support area would hold but it would be a retest of previous resistance – so it has a better chance to hold than any other level in the area.
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