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Fan Yang

Bitcoin Has a Wedgie; Pick it at 260

Bitcoin has been retreating after it rallied sharply to test the highs on the year in the 310-320 area. So far, it appears that the market is indeed keeping bitcoin at most sideways if not bearish in the medium-term.

Bitcoin (BTCUSD) 4H Chart 7/19

(click to enlarge)

The virtual currency's price has already retreated back below the 100-, and 50-period simple moving average (SMAs) in the 4H chart. Still, as we can see in the 4H chart, btcusd is still above the 200-period SMA, and the slide so far could be a falling wedge. These might offer some ideas of a bullish outlook, but in the near-term, we should anticipate continuation of the bearish correction.

However as price gets into the 259-263 area, we should expect some support. The 200-period SMA is around 263 and there are some key support/resistance pivots from earlier in July around 259 and 263. To be rough, we can say that the 260 area is a key support if the market is remain bullish.

If we see the 4H RSI around 30, and better yet form a bullish divergence around this oversold area, we should have more confidence of the bullish outlook. Then, we might need to see a break above 280 to convince the market of this bullish continuation outlook, which puts the 310-320 highs in play again.

However, if price falls below 250, the bullish outlook will be dimmer. Then, if price pulls back but holds below the 285 area, we should expect a bearish outlook at least in the short-term - within the week. 

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