Bitcoin Rallies Into Independence Day; Beware Another Volatility Dip
City Index | Jul 04, 2019 12:19AM ET
Whilst volatility is generally expected to be lower on U.S. Independence Day today, Bitcoin clearly has other plans after rallying 10% just after U.S. markets closed. Let’s take a close look at this volatility.
On the face of it, the daily chart appears constructively bullish. It continues to print higher highs and lows, a 3-wave (corrective) move is apparent on the four-hour chart and a spinning top Doji and bullish appeared near its corrective lows. Furthermore, the bullish hammer respected a 78.6% Fibonacci extension, before rallying higher.
If prices can build a level of support above 10, then we could indeed see this breaking higher. However, the levels of volatility seen near its record highs are a concern, so we’re on guard for another, volatile dip lower if it fails to break above its cycle highs.
As previously mentioned, volatility on Bitcoin is a different beast, but even by its own standards it appears erratic after hitting new highs.
- Bitcoin gave back nearly 30% after hitting its new high over 6 sessions, making it the largest correction during this uptrend. This compares with an 18% decline over 7 sessions in its previous correction.
- 27% of this fall was the day after the high.
- 8 sessions of the last 7 has seen daily ranges above 10% (the 1-year rolling average is 5.2%).
Flicking back through the chart, these levels of volatility have generally been associated with, downtrends, deep corrections or periods ahead of a crash. Therefore, whilst we shouldn’t necessarily ‘fight the trend’ if it breaks higher, having an appreciation for price action characteristics could at least provide a reality check for our expectations.
Original Post
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.