Recently, price action suggested Bitcoin (BTC/USD) might be heading into another low for 2018. However, we did note that "If price rebounds sharply from here $6100 and pushes above $6500, THEN we could seeing an inverted head and shoulders pattern. This is the scenario that would keep the bullish reversal outlook alive. "
Inverted Head and Shoulders (BTC/USD 4H CHart)
- As we can see on the 4H chart, price indeed found support around $6100 and rebounded sharply.
- This was the inverted head and shoulders scenario we discussed.
- We are probably therefore still in a recovery since late June. We can expect another week or two of upward pressure.
- If price pulls back towards $6800, we should then look for support.
- To the upside, I think we should start anticipate resistance around $8000.
- If a pullback goes below $6400, I would have even stronger anticipation of a new low because that would reflect a failed price bottom, and a failed bullish reversal.
- Until a break below $6400, I think the pressure remains upside towards $8000, maybe even $9000, where the 200-day simple moving average resides.
BTC/USD Daily Chart
I usually don't try to match news with price movement because there is so much noise. However, instead of a specific news, I think there is some aggregate trend that is giving BTC some resilience - the fact that Wallstreet is preparing exposure in the crypto space. Most recently, we have these 2 headlines:
The fact that BlackRock shows interest and that Coinbase is looking to basically list ICOs means this space still has growth.
The thing is, as much growth there is ahead for the space, price action in 2017 was still a bubble that is deflating in 2018. For this reason, I am not convinced that these headlines can help BTC/USD anchor into a bullish mode yet. To me, it is still prudent to keep dry powder below $6000, although I think we should have some exposure already between $6000-$7000 in case the capitulation dip we are looking for doesn't materialize.