Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Thomas Cook COLLAPSE! 300,000 Passengers Stranded, Flights Cancelled, Planes Grounded - 23rd Sep 19
Massive Stock Market Price Reversion May Be Days or Weeks Away - 22nd Sep 19
How Russia Seized Control of the Uranium Market - 22nd Sep 19
Dow Stock Market Trend Forecast Update - 21st Sep 19
Is Stock Market Price Revaluation Event About To Happen? - 21st Sep 19
Gold Leads, Will the Rest Follow? - 21st Sep 19
Are Cowboys Really Dreaming of... Electric Trucks? - 21st Sep 19
Gold among Negative-Yielding Bonds - 20th Sep 19
Panicky Fed Flooding Overnight Markets with Cash - 20th Sep 19
Uber Stock Price Will Crash on November 6 - 20th Sep 19
Semiconductor Stocks Sector Market & Economic Leader - 20th Sep 19
Learning Artificial Intelligence - What is a Neural Network? - 20th Sep 19
Precious Metals Setting Up Another Momentum Base/Bottom - 20th Sep 19
Small Marketing Budget? No Problem! - 20th Sep 19
The Many Forex Trading Opportunities the Fed Day Has Dealt Us - 19th Sep 19
Fed Cuts Interest Rates and Gold Drops. Again - 19th Sep 19
Silver Still Cheap Relative to Gold, Trend Forecast Update Video - 19th Sep 19
Baby Boomers Are the Worst Investors in the World - 19th Sep 19
Your $1,229 FREE Tticket to Elliott Market Analysis & Trading Set-ups - 19th Sep 19
Is The Stock Market Other Shoe About To Drop With Fed News? - 19th Sep 19
Bitcoin Price 2019 Trend Current State - 18th Sep 19
No More Realtors… These Start-ups Will Buy Your House in Less than 20 Days - 18th Sep 19
Gold Bugs And Manipulation Theorists Unite – Another “Manipulation” Indictment - 18th Sep 19
Central Bankers' Desperate Grab for Power - 18th Sep 19
Oil Shock! Will War Drums, Inflation Fears Ignite Gold and Silver Markets? - 18th Sep 19
Importance Of Internal Rate Of Return For A Business - 18th Sep 19
Gold Bull Market Ultimate Upside Target - 17th Sep 19
Gold Spikes on the Saudi Oil Attacks: Can It Last? - 17th Sep 19
Stock Market VIX To Begin A New Uptrend and What it Means - 17th Sep 19
Philippines, China and US: Joint Exploration Vs Rearmament and Nuclear Weapons - 17th Sep 19
What Are The Real Upside Targets For Crude Oil Price Post Drone Attack? - 17th Sep 19
Curse of Technology Weapons - 17th Sep 19
Media Hypes Recession Whilst Trump Proposes a Tax on Savings - 17th Sep 19
Understanding Ways To Stretch Your Investments Further - 17th Sep 19
Trading Natural Gas As The Season Changes - 16th Sep 19
Cameco Crash, Uranium Sector Won’t Catch a break - 16th Sep 19
These Indicators Point to an Early 2020 Economic Downturn - 16th Sep 19
Gold When Global Insanity Prevails - 16th Sep 19
Stock Market Looking Toppy - 16th Sep 19
Is the Stocks Bull Market Nearing an End? - 16th Sep 19
US Stock Market Indexes Continue to Rally Within A Defined Range - 16th Sep 19
What If Gold Is NOT In A New Bull Market? - 16th Sep 19
A History Lesson For Pundits Who Don’t Believe Stocks Are Overvalued - 16th Sep 19
The Disconnect Between Millennials and Real Estate - 16th Sep 19
Tech Giants Will Crash in the Next Stock Market Downturn - 15th Sep 19
Will Draghi’s Swan Song Revive the Eurozone? And Gold? - 15th Sep 19
The Race to Depreciate Fiat Currencies Is Accelerating - 15th Sep 19
Can Crypto casino beat Hybrid casino - 15th Sep 19
British Pound GBP vs Brexit Chaos Timeline - 14th Sep 19
Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - 14th Sep 19
War Gaming the US-China Trade War - 14th Sep 19
Buying a Budgie, Parakeet for the First Time from a Pet Shop - Jollyes UK - 14th Sep 19
Crude Oil Price Setting Up For A Downside Price Rotation - 13th Sep 19
A “Looming” Recession Is a Gold Golden Opportunity - 13th Sep 19
Is 2019 Similar to 2007? What Does It Mean For Gold? - 13th Sep 19
How Did the Philippines Establish Itself as a World Leader in Call Centre Outsourcing? - 13th Sep 19
UK General Election Forecast 2019 - Betting Market Odds - 13th Sep 19
Energy Sector Reaches Key Low Point – Start Looking For The Next Move - 13th Sep 19
Weakening Shale Productivity "VERY Bullish" For Oil Prices - 13th Sep 19
Stock Market Dow to 38,000 by 2022 - 13th Sep 19 - readtheticker
Gold under NIRP? | Negative Interest Rates vs Bullion - 12th Sep 19
Land Rover Discovery Sport Brake Pads and Discs's Replace, Dealer Check and Cost - 12th Sep 19
Stock Market Crash Black Swan Event Set Up Sept 12th? - 12th Sep 19
Increased Pension Liabilities During the Coming Stock Market Crash - 12th Sep 19
Gold at Support: the Upcoming Move - 12th Sep 19
Precious Metals, US Dollar, Stocks – How It All Relates – Part II - 12th Sep 19

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Short-term Turnaround in Bitcoin Might Not Be What You Think

Currencies / Bitcoin Jun 19, 2018 - 03:08 PM GMT

By: Mike_McAra

Currencies

The last couple of weeks have been disheartening for Bitcoin bulls. The currency has been on a move down. Is this about to end? The answer to this question determines whether the profits on our hypothetical positions are about to grow.

News has come out that the recent move down might be over. In an article on the Forbes website, we read:

The plunge began Sunday, with several factors possibly feeding into it, including a cyber-heist that hit South Korea’s Coinrail cryptocurrency exchange—even though no bitcoins were stolen—and a U.S. regulatory probe into Bitcoin price manipulation.


Bitcoin’s price fell from more than $7,600 on Sunday to little over $6,100 on Wednesday, marking a four-month low for a virtual currency that has already fallen precipitously from its almost-$20,000 high last December.

However, it seems that was the bottom for now. Early Thursday, the price jumped up above $6,500, and at the time of writing it seems to be holding at that level.

The cryptocurrency-whisperers over at Coindesk reckon that, even if there is a brief rally now, the market remains bearish and Bitcoin may still fall below $6,000. That last happened back in February.

We don’t necessarily support the idea that the news from Korea is behind the fall itself. It might have been a trigger but it seems that the move down is more an extension of a longer move down than anything else. The move down has been somewhat stopped recently. Is this a bottom?

Here, we agree with the opinion that the recent action doesn’t really mean that the decline is over. So, what might be read as a rebound and a potential beginning of another rally, might actually be a short-term pause in between serious declines. Does the short-term situation support this view?

Rally Erased

On BitStamp, we see that Bitcoin has stabilized around $6,500 and that the volume has declined. This is a bullish piece of news, right? Well, not really.



If you tak a look at the Fibonacci retracement levels based on the April-May rally (lines with percentages on the above chart), we see that Bitcoin has come all the way down from the early-May top to the level of the beginning of the rally. This mean that the move up as a whole has been erased. This is a bearish indication.

There’s more to that. Bitcoin is currently around $6,500, very close to the April 1 local bottom. Actually, the currency went below this level but came back above it. This, on the face of it, is a bullish indication. It might be one for the next couple of days. The RSI tells us that Bitcoin is not oversold any more, which also might be a short-term bullish sign.

The problem with the above bullish signs is that they are shadowed by a very serious indication that the currency might be about to trip the wire and move down substantially.

Bearish Triggers All Around

The long-term Bitfinex chart suggests that the recent action and the April 1 local bottom mentioned above might be important development as far as the long-term Bitcoin prospects are concerned.



The above chart shows that the April 1 bottom (horizontal line in between the 78.6% and 100% retracements), together with the February 6 local bottom, form a support area at $6,000-6,500 which might be quite important for the long-term situation. And Bitcoin is right at the upper border of this channel.

What this means is that we might see a breakdown below either of the boarders of this area, the $6,000 being the more important one, which in turn might produce pretty sizable moves. In other words, between $6,000 and $6,500 Bitcoin might fluctuate but it is also possible to see a deep decline from any point within this channel.

The most important point is that the volatility might get hairy, so getting out of the market in anticipation of a correction to the upside, based on the short-term signs, might backfire as increased volatility could result in Bitcoin reversing, piercing down through the support area and declining substantially. The other thing to keep in mind is that below $6,000, the next important support level is $5,400, the November local bottom and the base of the rally which took Bitcoin close to $20,000.

So, while it might be tempting to get out of the market at this point and wait for the currency to reverse, we are of the opinion that the potential volatility and the odds of a serious move down support hypothetical short positions. Instead of focusing on the next few days, we would rather have you focusing on the next couple of months and on the long-term prospects for your positions. Arguably, they are much more important and we would really enjoy your profits on the hypothetical positions growing even further.

Summing up, the recent move up hasn’t brought Bitcoin far from $6,000, a critical bearish trigger.

If you have enjoyed the above analysis and would like to receive free follow-ups, we encourage you to sign up for our daily newsletter – it’s free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to our premium daily Gold & Silver Trading Alerts. Sign up now.

Regards,

Mike McAra

Bitcoin Trading Strategist
Bitcoin Trading Alerts at SunshineProfits.com

Disclaimer

All essays, research and information found above represent analyses and opinions of Mike McAra and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Mike McAra and his associates do n7ot guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. McAra is not a Registered Securities Advisor. By reading Mike McAra’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Mike McAra, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Mike McAra Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules