Bitcoin Price Finds Bears Near $4,200, At Last Leg Before Breakdown
Bitcoin price on Wednesday traded inside a narrow session range as the market assessed the bearish correction of the previous day.
The Bitcoin/Dollar rate started the trading session with a jump towards $3,850 but rejected extended upside targets in a pullback action that stretched to as low as $3,686. Before the European session matured, the pair had already bounced back from the said support to pursue another attempt to break $3,850. As of now, it is hanging midway between the two levels, trading at $3,791.
The Bitcoin market is noticing a moderately high selling sentiment near $4,100-4,200 zone, which makes it difficult for the market to establish a sustainable bullish bias. Earlier in November, the price had faced similar difficulties while establishing a breakout target above $4,400. After that, the price had fallen towards $3,127-3,130 zone, which is now considered the interim bottom area.
The uptrend, however, is still intact. The Bitcoin/Dollar rate is fluctuating up and down inside the parameters defined by a rising wedge channel. The pair is now at the last of its legs before attempting a clear breakdown action towards the next nearest downside target. At the same time, the area could see the accumulation of long targets towards the channel resistance, which would bring it close to testing the 50-period moving average as well.
Meanwhile, the RSI momentum indicator is finding it difficult to break above 60 to establish a clear near-term bullish bias. It has now reversed again from the 55-58 neutral area.
The slow action on Wednesday has restricted our?trading parameters. Today, we have $3,850 acting as our interim resistance and $3,686 to the downside as interim support. Like always, our priority is to stick to our intrarange strategy which means opening a long order towards resistance whenever bitcoin bounces back from support and opening a short position towards support on every pull back action from resistance.
We will switch to our breakout strategy the moment we see bitcoin breaking above the resistance level, or breaking down the support level. That said, a break above $3,850 will have us put a long position towards $4,055, our primary upside target. As we place this order, we will also maintain a stop loss position just 1-pip below our entry level, to exit the market on a small loss should the bias reverse.
Looking to the south, a break below $3,686 would confirm a breakdown scenario and we will immediately open a short position towards the next downside target near $3,439. A stop loss just 1 pip above the entry point will meanwhile define our risk management strategy for the day.
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