Bitcoin – A false breakout?

Can it still capitalise on the breakout?

Bitcoin appeared to have made a very bullish move last week when it finally broke above $45,500 but since then, it’s all been downhill.

Sentiment in the broader markets has dipped in recent days and bitcoin has suffered as a result. Even prior to this, it failed to capitalise on the initial breakout which may have been a sign of what was to come.

While the trend in the longer term may still be positive, the current environment isn’t making life easy. A break of the ascending trend line raises the question of how big a correction bitcoin is facing. The resistance it faced from the same trend line supported that.

It’s already seeing support around the 50 fib level on the 4-hour chart which coincides roughly with the top of the 55/89-day SMA band, while the 61.8 fib roughly coincides with the bottom of the band.

This is the key zone that will tell us if this is a correction of the two-week rally since mid-March or something more.

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Craig Erlam

Craig Erlam

Former 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.