Analysis

Bitcoin breakout alert

CMC Markets

As the US elections loom on the horizon amid the landscape of the coronavirus pandemic, it is safe to say that 2020 could end with a bang! The markets appear to be factoring in a Joe Biden victory, however Donald Trump could pip the Democrat to the post like he did to the last contender 4 years ago.

Whilst the global markets continue to ebb and flow to the pulse of the major fundamental forces, which market is the safe haven? Is it the usual risk-off currencies, or Gold? Perhaps it could be Bitcoin?

The technicals of Bitcoin point to a possible breakout on the horizon. On the monthly chart below, you will note how price over the past 3 years has squeezed into the $10,000 level with the momentum indicators pointing to a possible continuation higher.

Price on the weekly timeframe (below), is making higher highs and higher lows with the momentum on RSI and MACD indicators pointing higher.

The daily timeframe (below) looks poised for a move higher following the break above a key support and resistance level of 11,100 (blue horizontal line). Price has been making higher highs and higher lows since the lows at the end of August.

Zooming in on the most recent price action on the daily timeframe, we can see this 11,100 S&R level coincides with the 50% Fibonacci retracement level drawn from the most recent high to the most recent low. This support cluster level sits in the moving average buy zone; the area between the rising 10 and 20 period moving averages. The RSI and MACD indicators are trending higher with bullish momentum.

A pullback over the coming days to the 11,100 level could offer me with a potential trade opportunity to join the uptrend with a target at the 12,400 level above. The recent low could make a decent stop location. As always, risk management is at the forefront of my mind as I pay close attention to the highly volatile nature of the global markets currently.

Happy trading!


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