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Bitcoin – Correction finally underway?

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How far will it fall?

It’s been a long time coming but we may finally have seen bitcoin move into correction territory.

Heavy selling at the start of the week saw bitcoin break significantly below $44,000 -and the 200/223-period SMA band on the 4-hour chart – before coming close to a break of $40,000 today.

A small correction (of the sell-off) saw the cryptocurrency test that prior support level from below (roughly, the support itself isn’t clear) before rotating lower once more. This acts as confirmation of the initial breakout and is a very bearish signal.

It is now heading back towards $40,000, a level that suddenly looks very vulnerable. A break of this is not just a psychological blow, it also breaks the 200/233-day SMA band, a very bearish signal.

With a move below $44,000 also breaking the neckline of a head and shoulders , a decent correction could be in store.

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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
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