Bitcoin recently made all-time highs, but is it time for a short-term correction in the longer-term uptrend?
Bitcoin Pullback/Support Ahead?
On the four hour chart above, we can see that bitcoin recently hit all-time highs, nearly testing the $62,000 level last week. That was a short-lived moment for the bulls as the market fell just a day later, supposedly on rumors that India will ban crypto or possibly on an erroneous call on whale movements from CryptoQuant, but who knows really? What matters is that bitcoin quickly fell 13% to just above the $53,000 handle before buying support formed.
Since then, bitcoin has been in a slow grind higher, and the bulls got a quick boost from yesterday’s monetary policy statement from the Federal Reserve, signaling no tightening action despite improvements to their economic forecasts. Basically they’re gonna keep an extremely simulative policy, i.e. bad for the dollar and good for assets priced in Dollars.
Looking forward, it’s likely that with the Fed not taking action on the rising bond yield situation, bond yields will continue to have a broad influence on financial markets. And with yields rising once again (10-year Treasury yield surges to 14-month high of 1.75%, 30-year rate tops 2.5%), the bullish momentum in crypto may slow for now.
Overall, it’s a fundamentally bullish environment for bitcoin, especially with a strong flow of bullish leaning headlines recently:
With institutional adoption gaining traction and more options coming to the market for retail investors/consumers to get exposure to crypto, pullbacks in bitcoin look like buying opportunities for now.
And if stochastic is right and we see another dip in the coming week, it’s probably a good idea to watch out for bullish reversal patterns around the Fibonacci retracement area/broken minor resistance area (around $50K – $57K) for a potential buying opportunity for both swing traders and longer-term players.
Of course, we’ve gotta manage our risk as nothing is guaranteed in the markets, so we always have to be aware that another round of bearish headlines could be right around the corner like last week’s India ban rumors.
If that does occur, consider that a sustained break below $50K could draw in more sellers depending on the catalyst, making it a potential stop area to watch for shorter-term players out there.
What do you guys think? Is there another short-term dip ahead? Will the Fib area draw in buying support?
Let me know in the comments below, and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.