Bitcoin running into major resistance

Kate Leaman
Kate Leaman

6 August 2019

Man holding a bitcoin

Bitcoin rallied a bit during the trading session on Tuesday, as the monetary battle between the United States and China has increased. There has been a lot of money flying into Bitcoin as a result, as money starts to leave China yet again. With the United States labeling China a “currency manipulator”, it opens up the door to several potential punitive tariffs being levied on Chinese goods.

Technical resistance

bitcoin chart

Bitcoin

The technical resistance at the $12,000 level of course is a major level of interest as the market tends the move in $2000 increments. With that being the case, it’s not a huge surprise that we have pulled back a bit, especially considering that the Chinese chose not to value their currency above the 7 level. That shows that the Chinese aren’t quite ready to escalate the currency war, so perhaps this cause some of the capital outflow from mainland China into Bitcoin to slow down a bit.

Beyond that, we are starting to form a bit of a shooting star so it is possible that we could pull back. A pullback isn’t necessarily a bad thing, as I see a ton of support underneath. It is of course at the next $2000 below, so that means we could go as low as $10,000 and make another attempt at this resistance. Beyond that, if we were to break above the $12,500 level on a daily close, then I think we will probably break towards the $13,000 level, followed by the $14,000 level.

The support below

The massive support below at the $10,000 level is not only based upon the $2000 increments, but also because of the 50 day EMA sitting there as well as an uptrend line. We have bounced quite nicely from that level and have done so rather quickly. Because of this, a pullback makes quite a bit of sense but I also think it will be bought into as we are clearly trying to build up the necessary momentum.

The trade in Bitcoin going forward

The trade in Bitcoin going forward is to simply look for value when it’s offered. I think it will be offered quite frequently, as we will chop around in this $2000 range. In fact, I have no interest in shorting this market, as I believe that the buying pressure underneath as far too strong. However, we have to keep any and all possibilities in the back of our mind. If we were to get a daily close below the $9000 level, then I think the $8000 level will be targeted, and then possibly the blue 200 day EMA. All things being equal though, I think that the first signs of support between here and $10,000 will probably be bought into. I mentioned a couple of days ago that it’s likely to be a market that gives you plenty of opportunities to pick up support, so buying little bits and pieces of Bitcoin along the way probably works out best. I remain bullish of Bitcoin.

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