Bitcoin jumped to retest $ 7000 but it could be a bull trap








Bitcoin price jumped sharply overnight to retest $ 7,000 but risked falling into a bull trap because there was no catalyst for the pump move.


The leading cryptocurrency jumped 9.67% in just 4 hours to $ 6,767 on Thursday night. The move injected about $ 7 billion into Bitcoin's market capitalization, peaking near $ 121.97 billion before the session. Morning translation in Europe. Today, the price has pulled back 2.3%.


bitcoin


BTC / USD increase above the resistance of $ 6,500 to test $ 7,000 as the next bullish target Source: TradingView.com, Coinbase


At the same time, the rising price saw Bitcoin break above the short-term support / resistance level of nearly $ 6,500. That confirms the $ 7,000 retest trend, which is the level it has tried but failed to break since the pullback from the yearly low of $ 3,858 in March.


Bitcoin risk reduction


Bitcoin's inability to exceed $ 7,000 indicates the temporary profit-taking behavior of traders in the macro-risk market. The rapid spread of COVID-19 has led investors to withdraw money from the market, leaving a giant dent in all traditional markets such as the Dow Jones, S&P 500 or even Gold. Every asset is facing extremely high risk.


So far, there has been no new treatment for Corona virus. US President Donald Trump has warning Americans return to "two very difficult weeks", prompting investors to seek cash security in US dollars. The greenback rose 3.45% on the annual time frame due to similar safe shelter needs.


As a result, all the top markets are in turmoil. Although they are increase strong during the day but failed to build up specific growth momentum. Bitcoin is not much different.



"A.This is an interesting chart. Bitcoin and SPX are currently extremely correlated as liquidity pressure turns all assets into risky assets. This correlation will last forever but it shows that everyone is using BTC to find Liquidity. CIt is likely a risky asset. ”


Still increasing


Therefore, it seems that the cryptocurrency may be entering the bull trap. Because there is no sign of continuing the upward trend based on macroeconomic story. And even analysts and experienced traders believe that Bitcoin will not increase until the COVID-19 crisis is resolved.


Travis Kling, founder of Ikigai Asset Management, supported Bitcoin noting that the government's response to the economic crisis was to pump trillions of dollars into the system. This strategy can help them in a short time but devalue people's savings in the long run. Kling says:


"After crisis subsided, economic activity continued and central banks, The government injects billions of dollars into the world by increasing the balance sheet and deficit. There is no other asset on the planet that moves like Bitcoin. ”


As of now, Bitcoin's next potential price action is to retest $ 7,000, then pullback to $ 6,500. In another scenario, the uptrend might exhaust before it reaches the $ 7,000 mark and returns below $ 6,500. Both cases will fall below $ 6,000.


However, the area above $ 5,657 that protects Bitcoin does not continue to be sold. Therefore, the price could bounce back from the said level to retest a breakout above $ 6,000.


In addition, famous trader George has outlined a Bitcoin chart that shows that the price movement of BTC will rise higher towards the resistance at $ 6,800. Before doing so, a low of nearly $ 6,500 is possible.



"Morning!


Prefer long here ... Scanning the low levels is imo long for top limit. Fall below the blue area then I will search for short again ”.


Short-term range


In the short term, the range can range from $ 6,685 to $ 6,545. Yesterday's rally made prices breakout the resistance of the range in the form of a long upper shadow. However, the price quickly fell back below the range and created the current support line.


The proposed movement in the tweet is the price fell below the support line before moving back into the range. This is a significant move because it has happened together with the resistance line.


bitcoin


Bitcoin chart | Source: Trading View


Larger range


However, the possibility of a move to $ 6,800 should also be considered. Depending on how the price responds to the upcoming decline, it may continue to move down.


Additionally, the price is trading in a longer range between $ 5,850 to $ 6,600. In this context, the price has just moved on top of the range.


bitcoin


Bitcoin chart | Source: Trading View


Therefore, if a bearish move occurs, it is important to see how the price responds to the support area of ​​about $ 6,480. If the price rises, it is expected to reach $ 6,800 and possibly continue higher. However, failing to hold this zone could result in a sharp fall in the EQ at $ 6,250 (dashed line).


Lower fall is quite unlikely because it coincides with the long-term ascending support line since March 13.



Bitcoin chart | Source: Trading View


In a nutshell, Bitcoin price has just moved above important resistance levels. But is expected to decline in the short term. The reaction to the support area of ​​$ 6,480 will determine the future direction.


You can see the price of BTC here.


Disclaimer: This is not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.


Minh Anh


According to AZCoin News




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