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The rebound in the cryptocurrencies has hit a wall following a slew of negative headlines.
Today, we should get some insight into the Fed’s plans to shrink its massive balance sheet. This news will affect the US dollar and can also influence the cryptocurrencies. These are uncertain times; therefore, we suggest traders cut their position size in half to limit their risk.BTC/USD
Bitcoin has been facing resistance at the $4,100 levels, according to our expectation.
Between $4,000 and $4,100, there is a confluence of resistance from both the moving averages and the downtrend line. The 50 percent Fibonacci retracement of the fall from $4,975 to $2,974 is also just below the $4,000 levels. Therefore, we had avoided recommending any trade in our previous analysis.
However, after consolidating for three days, if Bitcoin breaks out of this resistance zone, we expect it to gain momentum on the upside. Though there is a minor resistance at $4,210 - the 61.8 percent Fibonacci retracement level - we expect this resistance to be crossed. The next major resistance is at $4,680, after which a retest of the highs is likely.
Therefore, we recommend buying Bitcoin on a breakout above $4,120. However, before initiating long positions, the traders should watch for an hour or two to confirm that the breakout is sustaining.
The stop loss can be maintained at $3,660 initially. Once the cryptocurrency breaks out of $4,210, the stops can be raised to $3,800. Traders should similarly trail their stops higher to reduce their risk. Partial profits can be booked at $4,600 levels. Remaining positions...