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BTC/USD: Dead Cat Bounce or Buying Opportunity?

With a block reward halving just around the corner, BTC/USD trades at a near 40% discount to recent highs.

The question on many traders' minds is whether this bounce is a buying opportunity or a bull-trap that will invariably roll-over into lower lows.

Bulls will interpret current strength as a strong bounce off a key prior resistance line that has turned into support. The upward trending RSI will likely be seen as confirming the bullish price momentum and pullbacks to the low $5,000 region may be seen as buying opportunities.

Bears will interpret the recent sell-off as a continuation of a downtrend spanning from the highs of June 2019. The recent bounce is likely seen as a bull-trap, with key resistance at the top of the orange resistance zone and at the prior downtrend lows at ~$7,000. Bears might be aggressive shorters at current levels, anticipating a second rejection of the top of the orange resistance zone and a retest of the blue support zone.

Since the highly-correlated sell-off of BTC/USD with broader global markets, traders are on the lookout for any signs of emerging asymmetry. At the time of writing, the S&P500 index is trading down 0.74% with BTC/USD up nearly 1%.

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