Bitcoin showing resiliency
Bitcoin initially dipped during the trading session on Thursday but has turned around to reclaim the uptrend line that has been so important for some time. The fact that we reclaim this line is a good sign, and I suspect that what we are about to see is a continuation of the uptrend. Quite frankly, it has been a little bit more difficult to bounce than I anticipated, but as we head into the US session it’s obvious that there are buyers underneath the $10,000 level looking to get involved.
The technical analysis for Bitcoin does look good, as we have seen quite a bit of strength in the crypto markets for some time, but the last couple of months have basically been somewhat flat. This makes sense, because we had rallied so drastically that we would need to take a bit of a breather. The market needs to digest those gains, so that we can continue the upward momentum. By forming the candle stick that we had tried at the beginning of the US session, it looks like this could be the beginning of money flowing into Bitcoin.
The uptrend line has held, just as the 50 day EMA seems to be attracting quite a bit of attention. With that being the case, it’s very likely that the buyers are stepping in based upon the longer-term analysis, and then of course the fact that the $10,000 level is in that neighborhood doesn’t hurt either. Remember, I’ve been talking that this market likes the $2000 levels as support and resistance, and that of course divides perfectly into this number.
The range that we have been trading in is between $10,000 on the bottom and $12,000 on the top. To me, it looks as if we are simply trying to return to that, and that the trend line coincides quite nicely with the potential move. With that being the case, there is even more of a reason to be a buyer. If we did break down below here, then the next range becomes between $10,000 on the top, and $8000 on the bottom.
The trade going forward
The trade going forward is quite simple. On a break higher, somewhere near the $10,300 level, I believe that the buyers will come in and overwhelmed yet again as Bitcoin is so heavily favored at the moment. Ultimately, this is a market that I believe continues to attract a lot of attention, as central banks around the world continue to cut rates and weaken fiat currency overall. With that, it makes sense that money will go looking for other asset such as Bitcoin to escape this. With this, and capital flows coming out of China, Iran, and Venezuela, it’s very likely that the crypto markets continue to rally. Obviously, the Bitcoin markets are the first place most people throw money at. With that in mind I don’t have any interest in shorting this market, and if we were to break down I would only look to buy it at the $8000 level.