When moon? Well, this article aims to make a concise and comprehensive technical analysis of the phenomena we’ve witnessed in the last couple of days.
It seems like the moment we had been waiting for is here – or at least for the time being. Bitcoin just surged more than 20% and blew out of the strong $4,175 resistance level that had been holding the price since the week of December 10, 2018 (data feed from Coinbase). The king of cryptos went as high as $5,121 before pulling back to $4,750 and once again climbing up to the $4950 area.
Bitcoin Technical Analysis
In the past few weeks, we saw an ascending triangle developing on the weekly chart. It started after December 10, 2018, when Bitcoin went down to $3,130 and rebounded the next week to $4,175, forming the lowest and highest point of the ascending triangle. BTC continued trading between $4,175 and the 200-week moving average.
After the resistance level had been hit in multiple occasions, it finally broke – allowing the bulls to gain momentum and push the price, which went between a couple of hours as high as $5,121. Then, it quickly pulled back below the August 2017 high of $4,980, but remained above the 30-week moving average.
Now if Bitcoin is able to hold above the 200-day moving average, which is currently sitting around $4,630, it will increase the probabilities of more bullish momentum that could take it up to $5,700 – $6,000. I would like to see a break above $5,121 before thinking that $6,000 could be reachable.
Even though there is potential for a further push up in the price of BTC, it’d be wise to remain cautious, set proper stop-loss orders, and stay neutral until there is a clear indication that the trend has reversed and the bear market is over.
There is a chance that the current bullish momentum is just a bull trap before a steep decline in prices that could take Bitcoin back to the 200-week moving average – just like we saw it happened in July 2015 when the price rose up to touch the previous breakdown support at $317, to then pull back quickly to the 200-week moving average. It was that moment that marked the end of the bear market.
The cryptocurrencies are receiving a pump, and they have reached the highest levels since the dump that started on the week of November 12, 2018. At the time of writing, the market capitalization has reached $165 billion and it seems like there is more room to go.
Before anyone starts saying or believing that the bear market is over, it’s worth taking a look at what has happened in the previous valuation cycles that Bitcoin has had, so that one can be prepared for the best or the worst.
*This article is based on opinions, speculations and interpretations from the author and others, and is not in any way financial advice. Writing about price levels, charts, etc., is purely speculation, subject to speculatory bias. Nothing written is any kind of advice whatsoever. Proceed only at your own risk
Image by NASA-Imagery from Pixabay