Best of the Week
Most Popular
1. Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - P_Radomski_CFA
2.Fed Balance Sheet QE4EVER - Stock Market Trend Forecast Analysis - Nadeem_Walayat
3.UK House Prices, Immigration, and Population Growth Mega Trend Forecast - Part1 - Nadeem_Walayat
4.Gold and Silver Precious Metals Pot Pourri - Rambus_Chartology
5.The Exponential Stocks Bull Market - Nadeem_Walayat
6.Yield Curve Inversion and the Stock Market 2019 - Nadeem_Walayat
7.America's 30 Blocks of Holes - James_Quinn
8.US Presidential Cycle and Stock Market Trend 2019 - Nadeem_Walayat
9.Dear Stocks Bull Market: Happy 10 Year Anniversary! - Troy_Bombardia
10.Britain's Demographic Time Bomb Has Gone Off! - Nadeem_Walayat
Last 7 days
Want To Earn A Safe 5% In Fixed Income? Buy Preferred Stocks - 24th April 19
Can Gold Price Rise Without a Rate Cut?  - 24th April 19
Silver’s Next Big Move - 24th April 19
How Can a College Student Invest Wisely? - 24th April 19
Prepare For Unknown Stock Market Price Action As New Highs Are Reached - 23rd April 19
Silver Plays a Small but Vital Role in Every Portfolio - 23rd April 19
Forecasting 2020s : Two Recessions, Higher Taxes, and Japan-Like Flat Markets - 23rd April 19
Gold and Silver Give Traders Another Buying Opportunity - 23rd April 19
Stock Market Pause Should Extend - 21st April 19
Why Gold Has Been the Second Best Asset Class for the Last 20 Years - 21st April 19
Could Taxing the Rich Solve Income Inequality? - 21st April 19
Stock Market Euphoria Stunts Gold - 20th April 19
Is Political Partisanship Killing America? - 20th April 19
Trump - They Were All Lying - 20th April 19
The Global Economy Looks Disturbingly Like Japan Before Its “Lost Decade” - 19th April 19
Growing Bird of Paradise Strelitzia Plants, Pruning and Flower Guide Over 4 Years - 19th April 19
S&P 500’s Downward Reversal or Just Profit-Taking Action? - 18th April 19
US Stock Markets Setting Up For Increased Volatility - 18th April 19
Intel Corporation (INTC) Bullish Structure Favors More Upside - 18th April 19
Low New Zealand Inflation Rate Increases Chance of a Rate Cut - 18th April 19
Online Grocery Shopping Will Go Mainstream as Soon as This Year - 17th April 19
America Dancing On The Crumbling Precipice - 17th April 19
Watch The Financial Sector For The Next Stock Market Topping Pattern - 17th April 19
How Central Bank Gold Buying is Undermining the US Dollar - 17th April 19
Income-Generating Business - 17th April 19
INSOMNIA 64 Birmingham NEC Car Parking Info - 17th April 19
Trump May Regret His Fed Takeover Attempt - 16th April 19
Downside Risk in Gold & Gold Stocks - 16th April 19
Stock Market Melt-Up or Roll Over?…A Look At Two Scenarios - 16th April 19
Is the Stock Market Making a Head and Shoulders Topping Pattern? - 16th April 19
Will Powell’s Dovish Turn Support Gold? - 15th April 19
If History Is Any Indication, Stocks Should Rally Until the Fall of 2020 - 15th April 19
Stocks Get Closer to Last Year’s Record High - 15th April 19
Oil Price May Be Setup For A Move Back to $50 - 15th April 19
Stock Market Ready For A Pause! - 15th April 19
Shopping for Bargain Souvenirs in Fethiye Tuesday Market - Turkey Holidays 2019 - 15th April 19
From US-Sino Talks to New Trade Wars, Weakening Global Economic Prospects - 14th April 19
Stock Market Indexes Race For The New All-Time High - 14th April 19
Why Gold Price Will “Just Explode… in the Blink of an Eye” - 14th April 19

Market Oracle FREE Newsletter

Top 10 AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

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