Market Minutes: Watching For Potential Bitcoin Breakout
Deron Wagner | May 22, 2022 12:44AM ET
On Wednesday, when the NASDAQ plunged 5%, Bitcoin (BTC) sold off, but found support at its May 14 low.
This is marked by the horizontal line on the 4-hour chart below:
Price action started improving Thursday, with much of the altcoin market finally starting to wake up a bit. Bitcoin moved back above the psychological support level of 30,000 Thursday, then spent the overnight session consolidating in a tight range above that level.
When BTC was consolidating overnight, we started noticing emerging relative strength in the altcoin market, with a handful of tokens rallying higher while BTC moved sideways.
Overall, we see that BTC has been in a sideways consolidation pattern for the past 6 days.
Now that the price of BTC is showing a volatility contraction near the highs of its range, a breakout above the week-long consolidation may be coming soon.
This may be further aided by the short-term bullish reversal that may be developing in the stock market as well.
We mention this because it may be an overall bullish signal for crypto as well—at least in the short term.
After closing out a string of winning crypto swing trades recently, our portfolio has been mostly to fully in cash because the market has lacked bullish confirmation and relative strength in the altcoin market.
However, that situation appears to be significantly improving as we entered on Friday. As such, we were looking for new trade setups with relative strength and high volume.
Of course, we still needed to make sure we had low-risk entry points, such as pullbacks to intraday support.
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