Bitcoin sustained a significant sell off on Friday, dropping from $2210 to a monthly low of $2000 against the US Dollar.
In my previous analysis of Bitcoin here I correctly predicted the sell off from the $2600 area and we are fast approaching our take profit down around $1900. The $1800 level, our last rally point, will contain a large proportion of buy orders which should see price rise in the short term.
With Bitcoin being relatively young as a financial instrument the application of trend lines on the larger time frames seems less than fruitful when catching a turning point in the market. Therefore any traders buying around the $1800/$1900 level should proceed with caution with regards to long term profit targets.
To add weight to the possible turning point, we have the Relative Strength Index approaching over sold conditions. We are not yet into oversold territory but one final push down to our demand area should bring us there.
With regards to entries, the premium entry is at demand around $1800, which also acts as a psychological area for sellers to take profit and buyers to enter the market. Stops below the demand area at $1636 should keep any longs in play should any shocks hit the market. As previously states Bitcoin is a relatively new financial instrument and therefore take profit based on the next supply area is the safe play in this scenario. $2225 being our most recent drop zone.
Trade cryptocurrency with Plus500 one of the worlds leading CFD brokers.
For the very best charting software on the web open a free account with www.Tradingview.com