BTC/USD Retracement ? Back to 50% Fibonacci Level at $4400

5 min read

Hi trader,

we have been following BTC/USD for the last few months, including two BTC/USD trade setups. One was focused on a bullish break and hitting $5000 and the second was a bearish retracement back to around $3500 for a further uptrend continuation towards $5500.

Both scenarios played out exactly as expected: the bullish move hit $4950 (target was $5000) and the retracement went back to $3000 (bounce $3500) before ultimately hitting $5800 (target $5500) just a few days ago. Cha-ching! 🙂

Now the next question: what’s next? This article shares our vision for Bitcoin versus the US Dollar, BTC/USD, for the next weeks.

BTC/USD Bearish Daily Candles at $5800

Hopefully our target of $5500 for BTC/USD made you aware of the potential for a bearish bounce or reversal. Recently the bearish candles that appeared on the daily chart could have been an extra confirmation that price was about to build a bearish retracement. And it seems that this process has indeed started.

We expect that the bearish price action will take price back down (red arrow) to the 23.6% Fibonacci support level and steep inner trend line (blue) first of all. A small bullish reaction (green arrow) could take place there in the form of a bear flag but ultimately price will probably break (red arrows) below these support levels and reach a deeper Fib.

If price stays above the blue support trend line for 5-6 trading days after hitting the 23.6% Fib then the chances of an immediate trend continuation do increase.

BTC/USD Retracement to $4400 and Continuation to $6600

Our best estimate is that price will retrace back to the 38.2% or 50% Fibonacci level and bottom of the uptrend channel (green lines). We not expect a deeper correction because typically the low (purple line) of a strong bullish monthly candlestick (such as September 2017) will not get broken.

From this support area, we expect the uptrend to continue (green arrows) towards the -27.2% Fibonacci target at around $6600.

A break below the uptrend channel, the 50% Fib (blue box) and last month’s low would invalidate the bullish outlook and indicate that a new bearish pattern might be unfolding.

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Bitcoin Charts from Aug & Sep

We mentioned our Bitcoin analysis in the introduction but we wanted to add the charts too so you can see pre-fact and post-fact.

After our analysis of August 28 the BTC/USD indeed made a bullish breakout and reached the -27.2% Fibonacci target.

Then we expected a 3 wave correction above (orange lines) on September 8 which indeed happened by mid October:

Many Green Pips,

Chris

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