Middle Eastern tensions heightened considerably on Tuesday as Iran fired a barrage of missiles into Israel, following the Israeli incursion into Lebanon. Markets fell on the news, and Bitcoin crashed to $60,200 before recovering.
The BTC/USD pair crashed $3,800 on Tuesday as the conflict in the Middle East moved into a higher gear. With Israel and the United States promising retaliation, the price dump across all markets may not be finished yet.
$BTC falls out of ascending channel
Source: TradingView
The 4-hour chart above shows how $BTC had dipped out of the ascending channel. The price was on its way back up until the news of the Iranian missile attack came out. At this point, $BTC fell heavily, and was eventually held up by the 200 simple moving average (SMA).
This level also happened to be the target for the measured move out of the channel, and the price was able to bounce from there. Currently, $BTC is back above the strong support at $61,400, which it has just retested.
$BTC bounces from 50 SMA
Source: TradingView
In the daily time frame it can be noted that the price bounced from the 50 SMA. That said, the 200 SMA is starting to roll over slightly. Bitcoin will really need to recover strongly in order for this moving average to turn back up.
It now appears that the $66,500 local high that the $BTC price made in this latest uptrend was actually the top, and so now the rejection from the top of the bull flag is plain to see. The price is at a resistance level right now. If it is able to break through, the next resistance is above at $63,000.
Cause for concern on weekly chart
Source: TradingView
The weekly chart does show some cause for concern as it stands right now. The rejection from the top of the bull flag has turned into an enveloping candle. Also, the indicators for the Stochastic RSI in this time frame are beginning to lose momentum. If the price continues to fall, this could become yet another fake-out on the Stochastic RSI, and signal that price momentum would turn back to the downside.
That said, there are still a few days before the end of the week. If Bitcoin can recover, and nullify the enveloping candle scenario, a long candle wick could be left to the downside, which would signal strong buying from the bulls, and the likelihood of increased upside momentum going into next week.
Of course, both scenarios can depend to a certain extent on the size of the Israeli/US reaction to Iran’s missile strike on Tuesday. These are extremely uncertain times.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
