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In the wake of the Bitcoin split, could we be due a pullback given the recent rally?
Bitcoin has surged through the $3000 mark following the split at the beginning of the month, with ‘Bitcoin cash’ being created at a lower valuation. This left the price of Bitcoin to push onward, continuing its previous upward trend.
The hourly chart shows that the subsequent rally is coming under some pressure here, with a trendline break showing, at best, a slowing of the ascent. At worst, this could mean we are due a pullback, with the possibility of a gap fill move back down towards $3000. The $3329 level will be key in this, as a break below that level would mean we no longer create higher lows on an intraday basis.
Ultimately, this market seems to act much like an index, in that it has an innate uptrend over the long term. It has been proven that sell-offs are greeted with buying pressure, and as such it makes sense to look for longs on retracements. The four-hour chart highlights the fact that we were trading within an ascending triangle before the split last week. The prior swing low came in at $2644, which is the level that needs breaking for the bullish view to come into doubt.
However, until then a pullback on this wider spectrum could bring a buying opportunity, with the $2930 region looking particularly interesting from a risk-to-reward perspective. Looking at the stochastic, there is clearly a slowing momentum, and should we see a break below the 80 mark, alongside a move below $3329, it would look like we are set for a retracement lower for Bitcoin. Until that happens, the uptrend remains in play.
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