Bitcoin – Pulls Back after the Wedge Breakout

11:51    




Bitcoin - Pulls Back after the Wedge Breakout

The market ended last week with a bullish breakout from a falling wedge pattern. This can be seen as a bullish signal, with price poised to test July’s 658.75 high with risk for price to break that high. However BTCUSD is starting this week pulling back from the 640 support/resistance pivot area, which I noted would give the breakout some trouble: Bitcoin – Wedge Breakout Signals Bullish Continuation.


BTCUSD 4H Chart 7/14

btcusd 7/14 4h chart

(click to enlarge)


- The current pullback does not invalidate the breakout, but can be detrimental to very short-term traders trying to hop on the breakout because it has so far been a failed attempt.

- The RSI in the 4H chart for example failed to clear 60 and tag 70. Instead it came back below 60, which reflects consolidation momentum. There is no bearish momentum, but it questions whether the bulls are really in charge here after the breakout.

- If price starts to stay south of 630, the mini-consolidation low formed over the weekend, then the bullish breakout is likely false. In that case we should expect a bearish swing towards the 600 handle.

- This 600 psychological level could be reinforced by the rising trendline seen in the daily chart.


BTCUSD Daily Chart 7/14

btcusd 7/14

(click to enlarge)


- The daily chart provides confidence for the bullish outlook.

- As a matter of fact, after today’s dip, price is now checking the 200-day and 50-day SMAs.

- the 684 high in June, and the 710 high in March are still in sight. A break above 710 can liberate the BTCUSD from its neutral-bullish mode, into full-fledged bullish mode.

- The RSI in the daily still holds above 40. We need to see a clear break above 60, which would reflect bullish continuation momentum.


The non-bullish scenario, has downside risk toward 600, below 600, we should be looking at that support/resistance pivot around 550. In this scenario, BTCUSD would have invalidated the bullish outlook, and return to its neutral to bearish outlook for 2014.





July 14, 2014 at 11:37AM



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