Bitcoin’s price has broken through an important resistance level, which could lead to a turn to growth, but it failed to fortify on it. How can we determine the traders’ mood by looking at the price dynamics?
After a break through the level of $416.7, a powerful recoil followed. This shows that the majority is still expecting a downward trend, given that that level is profitable for sale deals. BTC/USD price chart 1 After that, the scenario has repeated itself: a new growth impulse with a breakthrough and a following recoil. This situation indicates the market’s uncertainty. One group of traders is making profitable sales deals, and the other is buying them out. No specific trend can form in such an environment. The price has to stop. That would be a signal of an overwhelming majority of traders appearing, who could exploit that price.
A mid-day example: BTC/USD price chart 2 In respect to the $415-$418.8 trend, the $417 price is the most profitable both for buyers and sellers. That point is the largest recoil from the $415 trend. Consequently, two potential scenarios appear here: a continuation of the upward trend or a turn to decline (which has actually happened). The price has stopped at that level, and that is a sign of fortification, i.e. absence of people who are willing to buy. As a result, we see a turn to decline.
A similar scenario is necessary for a larger scale trend. Whenever the BTCUSD price fortifies at $417 and starts forming a third wave of growth, is the most probable point for a formation of an upward trend with a minimal target of $422.7. For a turn to decline, the new resistance level has moved to the $413.5 mark. A similar fortification scenario is needed for a downward trend until $406 […]
