Bitcoin plunged on Thursday, stalling a price rally driven by fears of the US dollar debasement and higher inflation.
The benchmark cryptocurrency fell to $16,200 a token, a multi-week low, ahead of the New York trading session. By doing so, Bitcoin also broke below a crucial parabolic support that had offered it a concrete price floor during its relentless bull run in the previous seven weeks.
Looking closer, the bubble appeared reminiscent of a structure that the BTC/USD chart formed between March and May earlier this year. The pair similarly rallied to the upside while holding a bullish parabola as its support.
Later, it corrected out of the pattern, only to trade sideways for a prolonged period and eventually resume its uptrend.
Bitcoin trended sideways between the 23.6 percent and 0 percent Fibonacci levels after breaking out of the March-May 2020 parabola. Source: BTCUSD on TradingView.com
Meanwhile, another similar structure appeared during the Bitcoin bull run of early 2019. Nevertheless, the only difference was that it ended a deeper retracement to the downside, instead of March-May 2020’s sideways consolidation.
The Current Bitcoin Parabola
The two fractal served their respective bias for the current parabolic case. As the BTC/USD exchange rate broke out of the bullish structure, it found itself landed in the 0-23.6 percent range of its Fibonacci retracement graph. Interestingly, the pair held the 23.6 percent level as support during the Thursday morning hours in London.
Bitcoin September-November bullish parabola. Source: BTCUSD on TradingView.com
But will or will the support hold the Bitcoin’s running bullish bias entirely depends on what appears to a common support wave to all the recent parabola corrections. That is the green curve in the chart above: the 20-period exponential moving average.
The Bitcoin market held onto its short-term bullish bias as long as it traded above the 20-EMA. In 2019, the price breaking below the green curve followed by another close below the red one (the 50-SMA) set it on the course to $3,200.
That wasn’t the case after the March-May parabola breakdown. There, the Bitcoin price held above the 20-EMA, asserting its short-term bullish bias. Meanwhile, even occasional breakdowns below the green curve found an extended support level at the red wave.
$20K Likely?
Bitcoin attempting a retest of $20,000 is possible as long as it maintains support near the 20-EMA (near $15,000) and 50-SMA (near $12,000). They would serve as ideal levels for traders to refill their Bitcoin bags and eye a next bullish parabola towards the cryptocurrency’s all-time high.
by Yashu Gola on November 26, 2020 at 07:00PM
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