Bitcoin – Poised for a correction?

Running on fumes after 70% rally

Bitcoin has enjoyed a good run this past month but recent rallies are struggling to generate much momentum, which suggests a corrective move may be on the cards.

There was a lot of excitement as bitcoin broke back above $50,000 for the first time since May but it wasn’t long until profit-taking once again kicked in.

There is resistance around $51,000 – the 61.8% retracement of the April highs to June lows – which may be contributing to the profit-taking we appear to be seeing.

The momentum indicators on the daily chart are also both showing divergences – lower highs as price action makes new highs – which is another sign that the trend is weakening.

A correction would be interesting at this point, with bitcoin having rallied more than 70% in a little over a month.

Not exactly extraordinary for bitcoin considering what we’ve become accustomed to but still very substantial. The longer-term still looks bullish but perhaps a correction would be healthy.

With bitcoin having tracked the 55/89 SMA band higher on the 4-hour chart, a move below here could signal a correction is underway.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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