Chapter 14 07/07 BTCUSD: Range Trading with Focus on Buying Low and Selling High
Summary: Bitcoin price is showing multiple sell signals on the daily chart, suggesting a short-term correction. Nevertheless, we believe that the medium-term outlook remains bullish.
Fundamentals
The overnight loss of 0.5% in the cryptocurrency market cap brings it down to $1.2 trillion. Most of the losses occurred on Wednesday afternoon, while the capitalization has risen since Thursday morning. The market has struggled to sustain growth above the $1.22 trillion level since May last year.
The recent surge was primarily driven by Bitcoin surpassing the $30,000 mark once again, a significant psychological barrier and key resistance level. However, the sustained upward movement from the crucial support zone around $25,000 only reinforces selling pressure at the previous resistance level of $30,000. From a technical standpoint, Bitcoin has failed to break out of the previous range, indicating the possibility of a further correction.
Meanwhile, one should not overlook the events taking place in global stock markets. Bitcoin's rise earlier this year was driven by issues within the U.S. banking sector. However, if an economic slowdown increases pressure on the stock market, the correlation between stocks and cryptocurrencies could once again become positively correlated.
Technical Analysis
Bitcoin has experienced a significant rally over the past two weeks, breaking through the downward-sloping trendline connecting lower highs since April 14 and reaching a new high of $31,505 in 2023. However, the asset has once again entered a consolidation phase, with the current price still confined within two key range resistances.
The current momentum indicators suggest an increasing downside risk. Specifically, the stochastic oscillator is trending lower after forming a bearish crossover, while the RSI has dropped below the neutral level of 50.
If the price continues to retreat, initial support can be found at $29,010. Failing to hold this level, Bitcoin may decline towards $28,046 or lower to test the previous rally point of $27,403. If this hurdle is breached, $26,174 will be the final defense line for the bulls. Failure to maintain above this level would negate the medium-term bullish outlook.
On the other hand, bullish action could initially push the price towards $31,733. Breaking above this level would provide a clearer direction, and any corrections would present buying opportunities on the dips.
Overall, it appears that the asset has entered a consolidation phase after the upward movement has stalled, and it is estimated to take a significant amount of time before breaking out of the range trading pattern. During this period, the primary strategy for trading should focus on buying low and selling high.
Trading Recommendations
Trading Direction: Long
Entry Price: 30123
Target Price: 32016
Stop Loss: 28460
Valid Until: 2023-07-21 23:55:00
Support: 29521, 28462, 27460
Resistance: 31505, 31733, 32376
