After an uncertain week in the BTCUSD, traders look to have gravitated towards the technical bias offered up by the intraday charts to gain insight into the potential future direction of the pair. The main reason behind the technical focus is the conflicting fundamentals that have surrounded the cryptocurrency world over the past fourteen days.
So what do the intraday charts tell us about the likely future direction of the pair? Let’s take a look.
Having rallied throughout the first half of the week, the BTCUSD reached Thursday highs at 540.712, sharply declined, then reversed again to the upside to reach fresh weekly highs at 545.127. A small correction again put pressure on the pair towards previous support at 489.361, from which a small reversal catalyzed a boost in strength to towards 532.30. Sharp declines on Thursday morning have broken aforementioned support, and completed a head and shoulders pattern in the process. When a head and shoulders completes in an uptrend, it can signal a medium term reversal. Therefore, the intraday technical bias is to the downside.
Traditionally, the target inferred by a head and shoulders pattern is found by measuring the distance between the head and the neckline, and extending this down from the neckline. With this in mind, the traditional target lies at 428.621. Having said this, in such a volatile market there may be some upside resistance before the BTCUSD reaches this target. For the more risk averse, or the more short term traders, therefore, a staggered target approach may be warranted. A look at the recent key levels suggests a close below in term support at 467.912 would offer up an initial downside target of Tuesday/ Wednesday support at 449.146. Beyond that, look for a strong close to validate a secondary target at 449.146 and 435.213.
As ever, stay on top of your risk with tight stops just the other side of your downside entries.
To contact the reporter of this story: Samuel Rae at Samuel@forexminute.com