After a phenomenal and very surprising run, the price of Bitcoin in relation to the US dollar is showing signs of retreating into a inevitable correction.
On a daily chart of BTCUSD as shown by price data from Bitstamp, we can clearly see a long-tail Pin bar indicating a trend reversal.
Long-tail pin bars are usually an indication of a strong rejection of a bullish run by the market and it is very often followed by a period of trend reversal.
As shown in the screenshot, the next candle after the long-tail Pin bar has already crossed the range of the previous candle. We are still waiting for a confirmation of this bearish signal with a candle close.
Although this type of price action trading suggests high probability of trend reversal, nothing can be certain, especially when it comes to trading Bitcoin.
There are rumours which I have personally read on crypto trading rooms that a few major exchanges have experienced DDOS attacks in the course of the bullish Bitcoin run, forcing the price down due to traffic congestion.
Today there are numerous press releases saying that Coinbase and Gemini, both of which are major cryptocurrency exchanges have experienced very high demand for their services forcing their networks to overload temporarily.
These type of events will send ripples through the market, the effects of which can be seen in the BTCUSD price action.
Next levels of BTCUSD support
By looking at the price action of BTCUSD I can identify 3 levels of potential support. If the bears take hold of the market, the price of Bitcoin/USD should find support near the $8400, $7600, and eventually near the $5900 levels.
If anyone wants to invest in Bitcoin, these levels could be good entry points.
Technical challenges and market manipulation will be a part of Bitcoin and this whole new digital landscape for a while. Until Bitcoin becomes fully adopted by the markets, be ready for big price swings.