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Bitcoin Stuck Between A Rock And A Hard Place

Published 27/02/2018, 12:59
Updated 18/05/2020, 13:00

The crypto carnage that started at the end of last year may have ended at start of February. In recent weeks, prices have stabilised across the board as fears over the clampdown on crypto exchanges abated. Bitcoin, the most popular crypto, has managed to recover from sub $6000 to trade above $10600 at the time of this writing. Ethereum, Litecoin, Bitcoin Cash, and Neo have all recovered, too, although Ripple has lagged behind somewhat.

But despite the rebound, Bitcoin still remains stuck between a rock and a hard place. As can be seen on the daily chart, resistance around the lower bound of the $11200-$11800 range continues to hold price down. As well as prior support and resistance, this is where a bearish trend line comes into play. The 50-day moving average, which comes in at 10600, has been providing additional resistance. This moving averages had provided significant support in the past.

But the ability of Bitcoin to hold its own above the 200-day average and the long-term trend line suggests that soon it will clear that $11200-$11800 resistance range. If and when it does, then we will have some confirmation that the bull trend has potentially resumed. In this potential scenario, Bitcoin could take off again with the next bullish objectives coming in at $12800 (50% of the drop from near $20K), $14400 (61.8% Fib against the all-time high) and $15500, an old support and resistance level.

Meanwhile support for Bitcoin is seen around $8950 to $9500, an area which was previously support and resistance. The upper end of this range has already been successfully tested. But in the event Bitcoin breaks below this support area, then we could see a drop to $6500 or perhaps even $5000 next, as the buyers rush for the exits.

So, in summary, Bitcoin looks like is trying to form a base. However, it still needs to repair further damage before one can conclude that the corrective trend is over.

Bitcoin Daily Chart

Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

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