Bitcoin Bounces as Gold, Silver Rush to Fresh Highs

Bitcoin, BTC/USD Talking Points:

Bitcoin is up 1.8% on the day following the failed run at the 125k handle.
Other fiat alternatives like Gold and Silver have shown intense bullish moves of late and this keeps continued strength as a possible scenario for Bitcoin in the near-term.

Bitcoin’s first ever test of the 125k level didn’t go as planned for bulls, but it looks like there may be another test around the corner before too long. Yesterday showed a sizable sell-off as BTC shed 2.67% but the day after has seen a strong response for buyers, with a rally of 1.8% on the day. This wouldn’t necessarily be out of the ordinary as the first test of 120k led to a pullback as did 110k back in May. Major psychological levels of this nature can be logical waypoints for longer-term bulls to take profits, and as such, it can take time before the market gains acceptance above those levels while continuing on to fresh highs.

The question now is just how aggressive bulls remain to be. If we look elsewhere, like the intense rally that’s continued in Gold or the more recent rally that’s taken over in Silver, there’s no shortage of demand for vehicles that diversify away from fiat currencies. There’s been similar motive in Bitcoin, going back to Jerome Powell’s speech at Jackson Hole. At the time Bitcoin was testing support around 108k and those lows haven’t been re-tested since.

It does however seem too early to assume acceptance of 125k or perhaps even 120k as we’ll look at in a moment on a shorter-term chart.

Bitcoin (BTC/USD) Daily Chart

Chart prepared by James Stanley; data derived from Tradingview

Bitcoin Shorter-Term

The sell-off from 125k created a shorter-term series of lower-lows and there’s even a case for a lower-high given the prior day hold of resistance at 125k, just inside of the prior high at 126,272. And at this point, there’s even a possible resistance test at a prior support swing of 123,654. If that resistance holds on the four-hour, the door can remain open for a deeper pullback. To nullify this, buyers will need to pose a closed candle body break beyond 125,235 at which point bullish resumption is back on the cards.

But, perhaps more attractive for both bulls and longer-term setups would be a deeper short-term retracement to re-test the 120k level. It’s at that point that buyer demand can be gauged to see whether there’s some element of defense at the psychological level. If not, a deeper retracement is favored, and prior resistance taken from support at 116,971 stands out as the next area of attraction on a larger sell-off.

Bitcoin (BTC/USD) Four-Hour Chart

Chart prepared by James Stanley; data derived from Tradingview

--- written by James Stanley, Senior Strategist

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