Coronavirus cases across the globe topped 10 million today and the number of new cases in the U.S. has risen to new records in the past few days. This has put the economic revival in jeopardy as equities markets could face selling pressure. Meanwhile, safe haven assets like gold continue to perform well.
Crypto market data daily view. Source: Coin360
Earlier this week Bloomberg analyst Mike McGlone said that the drop in Bitcoin’s (BTC) volatility has resulted in tightening of the Bollinger Bands, a popular technical analysis indicator used by many traders. McGlone expects that the top-ranked cryptocurrency on CoinMarketCap to eventually rally to $13,000 if it stays above the $6,500 support.
Most major cryptocurrencies have entered a consolidation phase and trading in a range-bound market can be difficult as the price action is volatile. Traders might consider reducing their risk by cutting their usual position size. Normal position size can be restored when crypto markets start trending again.
After failing to scale above the $10,000–$10,500 zone for the past few days, Bitcoin is witnessing profit booking by the short-term bulls. On June 27, the price slipped below the trendline and also the critical support at $8,910.04.
BTC/USD daily chart. Source: Tradingview
The 10-day exponential moving average ($9,277) has started to turn down and the RSI is in the negative zone, which suggests that bears have the advantage in the short-term. However, the medium-term points to a consolidation as the 50-day simple moving average ($9,399) is flat.
The failure of the bears to capitalize on the fall below $8,910.04 on June 27 suggests a lack of sellers at lower levels.
Currently, the bulls are attempting a recovery. If the bulls can push the price back above the trendline and sustain it, a move to the downtrend line of the descending channel is possible.
On the other hand, if the BTC/USD pair turns down from the moving averages and breaks below $8,910.04, a deeper fall to the support line of the channel is possible. The bulls are likely to defend the zone between $8,130.58 and the support line of the channel aggressively.
BTC/USD 4-hour chart. Source: Tradingview
The relief rally currently underway can face resistance at the previous support turned resistance at the trendline.
If the bulls can push the price above this resistance, the possibility of a rally to the downtrend line of the channel increases. A breakout of the channel will be the first sign of strength that will indicate a possible move to $10,000.
Conversely, if the price turns down from the overhead resistance level, the bears will once again try to resume the down move. A break below $8,825 will signal weakness. Below this support, the decline can extend to $8,628 and then to $8,400.
There is no clear trend, hence, the price action is likely to remain volatile, which can benefit the short-term trader who enters and exits trades quickly, without waiting for a large move.