Trader notes Bitcoin’s local weakness

A practicing trader and founder of the project Crypto Shaman Vadim Shovkun explains the current market situation.

The S&P 500 index continues its gradual climb, confined within an ascending wedge. There is still no threat from the equity market.

Bitcoin bounced off the first of the sell zones; further arguments and areas of interest will help clarify the situation.

At the moment the price has decisively exited the two-month range; on August 9 it retested and continued higher. The market being flooded with numerous positive news gives it good momentum. However, on the RSI indicator, especially on the daily time frame, a bearish divergence is already evident. Volume has noticeably fallen since July 25 (price/volume divergence). The price has also moved up against a powerful broad selling zone, though movement remains rather lacklustre. The market’s main expectation is for a short-term decline.

The level — $42 460 is now an excellent support shelf. The zone $47 9500-$48 200 is the first strong resistance zone. $50 000 is the second strong resistance level, as well as a psychological threshold. The entire corridor $50 000-$60 130 is the zone of two supporting sell bars out of a three-month accumulation range.

At the moment the zone of interest for long positions can be highlighted as $43 300-$44 000. Exiting this local scenario would be a move below $42 785. Breaking this level would form a BOS (break of structure) pattern.

In the case of a move below $42 785, the price would meet the zone $38 600-$40 300 with good resistance; this is the PoC (Point Of Control) of the weekly rise. An attack below $37 280 would negate the scenario. Breaking this level would cast serious doubt on the local uptrend. If a position is built in the second green zone, Bitcoin could be expected around $47 000-$49 000.

It is worth emphasising that the current rise is nothing more than a corrective move within a bear market. Therefore one should approach potential investment decisions with caution and not forget to manage risk.

Subscribe to ForkLog news on Facebook.