Bitcoin has made headlines once again, as reports that Mt Gox founder and CEO faces an extradition order from Japan to the US remind traders and investors of the potential dangers of exposure to the cryptocurrency world. Concurrent reports that a group of investors may rescue (and overhaul) the exchange may limit the downside impact of the negative headlines, but what are the levels to watch in either case?
First, lets take a quick look at the recent action in the BTCUSD.
Having declined sharply heading into the easter weekend, a bullish pin bar at 467.84.3 resistance catalyzed a small correction on Friday. The correction did not last long, as the pair carved out fresh weekly lows at 454.103 on Saturday. Subsequent to the lows however, a sharp rise in value saw bitcoin regain the entirety of its lost value to reach intraday highs at 503.516 on Sunday.
A double top has formed over the past 24 hours, offering up an intraday technical bearish bias. A break below the pattern’s neckline at 480.014 would offer up a traditional pattern target of 454.103, calculated by taking the distance from the neckline to the pattern top and extending the same distance to the downside from the neckline. Keep in mind that the current volatility may cause some choppy action in the pair as the day matures, so a less risky approach might be to take some downside profit off the table at an in term target. Previous resistance at 467.843 looks to be a nice medium term goal.
As ever, the cryptocurrency pairs can throw up some considerable intraday volatility as the market interprets fundamental news and rumours. For this reason, keep one eye on risk management. Stop losses just the other side of key entry levels will ensure that you exit a trad in the event of a bias reversal.
To contact the reporter of this story: Samuel Rae at Samuel@forexminute.com