Welcome to my first Bitcoin analysis of 2020! My recent outlook, has generally been that Bitcoin is in a bottoming process, along with other major cryptocurrencies. I also believe that if Bitcoin dominance hasn't already topped out, a new high is unlikely to be sustained for very long. In June, I perfectly called the top when Bitcoin was near $14K, and I also suggested that Litecoin could ultimately head all the way back to $40-50. Some of my favorite posts from the last 6 months are linked at bottom. This analysis is just about Bitcoin in the short term. We have a few potential scenarios here:
Bullish:
1) BTC can hold the 50d MA, break the 50w MA, and make a run for the top of the downtrend channel.
2) It can break the downtrend channel and test the 200d MA.
3) We can break the 200d MA and make a run to test the massive supply zone between $10K and $14K. A large move is very possible, since the weekly bullish cross (50 MA/100 MA) will have been confirmed at this point. In 2016, this same cross produced a 100% move to the upside.
Briefly - My medium term expectation is pretty moderate. I'm not expecting a higher high. Instead, I'm forecasting some slower growth, but perhaps with more volatility. This means I think we can head up towards the $9K-10K zone, only to drop back down again to form a higher low.
Bearish:
1) BTC cannot close this week above the 50w MA or the 9w MA (both near $7700), causing it to head to a new low, perhaps around $6100.
2) The market falls apart and Bitcoin breaks below the bearish channel. Below, I'll explain why I don't think this is likely.
Here are a couple of reasons why we may not go lower:
1) The weekly ultimate oscillator just broke above 56 for the first time since the April Fool's rally last year. This signals a potential breakout, with buying momentum to back it up.
2) As I mentioned in today's video, people don't tend to sell on breakdowns from a downtrend channel, they tend to buy. In a downtrend channel, smart traders are simply waiting for a reversal in the trend, while day traders are losing money in the chop, as we bounce between support and resistance. The downtrend channel matters because it CAN be broken, and the trend can reverse. If Bitcoin were dying out, we'd break BELOW the channel and accelerate parabolically to the downside. Instead, what we see is likely accumulation.
This is not financial advice. This is meant for education, speculation, and entertainment only.
-Victor Cobra
Bullish:
1) BTC can hold the 50d MA, break the 50w MA, and make a run for the top of the downtrend channel.
2) It can break the downtrend channel and test the 200d MA.
3) We can break the 200d MA and make a run to test the massive supply zone between $10K and $14K. A large move is very possible, since the weekly bullish cross (50 MA/100 MA) will have been confirmed at this point. In 2016, this same cross produced a 100% move to the upside.
Briefly - My medium term expectation is pretty moderate. I'm not expecting a higher high. Instead, I'm forecasting some slower growth, but perhaps with more volatility. This means I think we can head up towards the $9K-10K zone, only to drop back down again to form a higher low.
Bearish:
1) BTC cannot close this week above the 50w MA or the 9w MA (both near $7700), causing it to head to a new low, perhaps around $6100.
2) The market falls apart and Bitcoin breaks below the bearish channel. Below, I'll explain why I don't think this is likely.
Here are a couple of reasons why we may not go lower:
1) The weekly ultimate oscillator just broke above 56 for the first time since the April Fool's rally last year. This signals a potential breakout, with buying momentum to back it up.
2) As I mentioned in today's video, people don't tend to sell on breakdowns from a downtrend channel, they tend to buy. In a downtrend channel, smart traders are simply waiting for a reversal in the trend, while day traders are losing money in the chop, as we bounce between support and resistance. The downtrend channel matters because it CAN be broken, and the trend can reverse. If Bitcoin were dying out, we'd break BELOW the channel and accelerate parabolically to the downside. Instead, what we see is likely accumulation.
This is not financial advice. This is meant for education, speculation, and entertainment only.
-Victor Cobra
Comment:
Looks like we got rejected precisely at the 100d MA. Alts have given up much of their gains, so perhaps we get a retrace here, maybe even towards the mid- 7.4K zone to test it as support. This market is moving slowly now. On a positive note, we're above the 50 MA on the weekly. What I don't want to see is a close BELOW that this coming Sunday.
Comment:
Volume actually continues to look good, so perhaps the recent dump to $7700 was enough to fuel the breakout above the 100d MA. We shall see. The first main target on this chart is near the descending resistance.
Comment:
100d MA successfully broken, but alts haven't really followed much. But let's see if Bitcoin can make it to the first major resistance, around $8400. That would probably be a good short term take profit area, if one hasn't taken profit already.
Comment:
First major target area for this short term post has been reached.
Comment:
Since Bitcoin got rejected in the sell zone on high volume, and alts failed to break out of their downtrend, I think it's possible we see a fairly large drop now. Unless Bitcoin can break above the recent high with conviction, there's still a chance we drop towards $6.1K or lower. This trade idea worked out, but now I think day traders should wait for the next opportunity. For example, if we close the weekly below $7700 or 7600 that would be a good short signal.
Comment:
Now above the recent high with decent volume. We've also broken the downtrend, but we want the weekly candle to close at or above current levels to continue looking bullish.
Comment:
And there you have it. Both green X targets reached.
