Forex Analysis:Bitcoin Prepares To Correct Towards 6700

Bottom line: Bitcoin long term structure continues to remain bullish against 3850 lows. Af…

Bottom line: Bitcoin long term structure continues to remain bullish against 3850 lows. After hitting recent swing highs above the 11000 mark, the crypto might be ready to take a plunge towards 6700 mark in the near term.

 Fundamental Outlook:

Dow Jones had dropped by -0.85% yesterday and managed to close around 26395 levels. Dow futures are trading lower for now, around 26330 mark. The SP500 and NASDAQ also closed lower by -0.66% and -1.25% respectively. Asian markets are mixed with Nikkei down -1.20% and Hang Seng almost flat.

Global Indices are expected to remain under pressure amidst rising COVID-19 infections across several states in the US and other countries. China has also reported fresh cases and they have been on the rise. We might witness volatility across DXY, Indices and Gold prices with FOMC rate decision today.

AUDUSD, the risk related currency pair is trading close to its July 22 highs at 0.7183 as we prepare to publish the update. The exchange rate might come under pressure if risk assets selloff. Also, rising COVID-19 infections in Victoria and Australia-China trade relations might fuel the slide.

Technical Analysis:

Bitcoin has managed to print fresh swing highs around 11400 levels this week. It has produced a Doji Candlestick pattern on the Daily chart yesterday, indicating a potential bearish reversal ahead. Bears might remain poised to push toward 6700 at least in the near term.

Bitcoin has managed to carve a meaningful boundary (impulse wave) between 3850 and 11400 levels over the past several weeks. Ideally, the crypto should be carving a corrective drop towards 6700/6800 mark, before the rally resumes further.

Also note that fibonacci 0.618 retracement of the above rally is seen to be passing around 6750 levels. High probability remains for a bullish reversal if prices manage to reach there. Traders might have booked profits on the longs taken earlier and remain flat for now.

Prepared by

Harsh Japee, Technical Analyst.

 

Bitcoin Chart

 


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