Bitcoin Price Analysis: Why does this support level look so strong?
- It has been another horror week for cryptocurrencies and Bitcoin has fallen over 8.5% on Monday.
- This current support zone looks very strong and in the chart below you can see the reasons why.
BTC/USD daily chart
On the chart below you can see the extent of the recent price drop. From just above 10K to under 5K once again this afternoon, the "hodlers" must be worried about their wealth. There has been a strong 5 wave pattern down but there has been no 3 wave consolidation period just yet. Is now the time for that structure?
Looking closer at the chart now, the priced bounce very nicely off the 161.8% Fibonacci extension. On the left-hand side there is a purple rectangle, the Fibonacci level matches the middle of the consolidation zone perfectly. If the price does break lower then the bottom could be tested but the key at the moment is the fact that the daily candle has not closed above the top of the consolidation area.
As the area looks so strong maybe we can start the ABC consolidation 3 wave pattern. If this is the case then watch out for a 38.2% retracement of the wave down. This level matches with the 100% line of the first wave to the point. It seems the Fib stars are in alignment.
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Additional levels
Author
Rajan Dhall, MSTA
FX Daily
Rajan Dhall is an experienced market analyst, who has been trading professionally since 2007 managing various funds producing exceptional returns.
