Bitcoin (BTC) price clearly broke through key support levels at $9,500 recently, as shown in my previous analysis and has since dropped to $7,700 losing almost 19% of its value within the last few days.
Bitcoin Daily Price Analysis
On the 1 hour chart for XBT/USD, we can see that a descending channel has formed as a result of the last move to the downside. Volume descending alongside descending price action highs leads me to believe further downside will take place over the coming days. I suspect price action will test a strong support line at $7,200 and could potentially go as low as $7,000. It’s likely there will be a bounce around this region providing adequate buying volume accompanies the bounce.
Key resistance levels to consider taking profit at if bitcoin does see a bounce around $7,000 are $7,650, $8,100, $8,400, and $9,000. These are sensible levels to consider taking profit at if you enter into the market around $7,000 in hopes of a bounce play.
It’s important to practice effective risk management such as scaling into the market in 10-25% increments as opposed to entering into the market in one 100% increment. Scaling into and out of the market allows you to manage risk by averaging in the best dollar cost average entry, or best BTC cost average entry. Trailing stop losses, and typical stop losses are mandatory for any trades whereby price action trades close to a critical support level that could dictate the consensus switching from bullish to bearish for Bitcoin.
Do you think bitcoin price will bounce around $7,000 over the coming days? Please let us know in the comments below!
Images via Bitcoinist Image Library, BTC/USD Charts via TradingView
Note:- This article is purely educational and isn’t to be construed as financial advice.
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