Impact of oil crash on Bitcoin & key levels to watch out for # 21April
Two fractal analyses, small bearish wedge & high volume node support
Good Morning Tuesday! Yesterday was historical as we experienced a -305% crude oil crash! This development from the oil industry had a significant impact on the US stock market which saw a 4% dump. As we all know Bitcoin is quite co-related nowadays with the US stock market, hence it also experienced a ~4% drop, although in our previous post we had mentioned that we can see further dump if Bitcoin cannot hold $7150 levels, irrespective of the oil crash event.
Today’s important levels to watch out for:
$7450: To become fully bullish, then we can target
$7900 $7150: Needed to cross it to resume bullish momentum
$6950 — $7000: Needed to hold above this to avoid going further down
$6727: Strong support, previous high volume node
$6600: Next Fibonacci retracement level
$6100: In case of a violent downward move this level should hold
Do you have 68,800 oil barrels worth of BTC?
Sorry Bitcoin bashers, oil has hit zero before Bitcoin!
An uncanny resemblance
We saw the same declining volume rising price pattern during the last April(2019) capitulation phase, that we are observing now. During that time majority of people were of the opinion that Bitcoin is going to see sub $2000 price, instead, it went on to a rally which topped at $13,500. Currently, we are experiencing the same pattern(rising price-declining volume -> bearish setup) where everybody is expecting Bitcoin to go below $4000. Will Bitcoin follow the fundamentals or will it repeat 2019 bull rally?
What if oil sell-off impacts Bitcoin?
Under the current scenario, when oil sellers are paying buyers to buy their oil, it is evident that every market will eventually start to feel the heat. The tweet below is particularly interesting as it shows the Fibonacci retraction levels to watch out for, if and when Bitcoin starts it’s downward move. Currently, we are still well above $6600, watch out for these levels if BTC slides during US trading hours.
Another flash crash?
A similar setup is forming like the one that had occurred during mid-February where BTC went past $10,000 in a fakeout of descending channel. If the fractal plays out in a similar manner, then we are up again for some crazy downward move.
Another bearish wedge!
The breakout from the previous wedge formation which happened a week ago was slow and weak, with low volume, which caused that trap to move up again a few days ago. Now it looks like another smaller wedge was in play on the 6hr timeframe. which has also broken in the downward direction.
The key level to watch out for is $6950-$7000 and if the smaller wedge also proves to be fake then we should see a counter move in the upward direction pretty soon. Otherwise, if Bitcoin manages to stay below $6950 then it would mean we are in for some more correction!
High Volume node support at 6727
The analysis below is simple yet very effective. Price normally bounces off the previous high volume nodes. Bitcoin is about to test one such high volume node located at $6727. We can consider it as strong support and once we break below that, then the next high volume node is at $6200.
Some more reading from Reddit
AAaannnd that’s a wrap for today! Please always keep in mind that absolutely NO part of this write-up is trading advice and you should always trade at your own risk. We would continue to bring more such analyses to you every day, till then please share and subscribe to our newsletter and happy trading! Also please go through our previous posts to get the full picture. Ciao!
