A sudden 2% pump in price for BTCUSD is exciting... it suggests we may finally see the market start to rise.
However:
On closer inspection we have cause to be cautious...
Until we see a breakout or a swell of momentum and volume on higher time-frames, Team Sparkster is skeptical.
The problem is that Market Makers (whales and institutions) can easily take advantage of the liquidity available above and below resistance levels.
By pumping the price just a little bit during times of relatively low volume and thin order books, a whale can trigger stop losses causing a cascade of orders, even liquidations, allowing the whale to scoop up that liquidity and then sell it back to the market leading to a drop in price.
Notice on the chart circled in green the long wick that extends beyond recent high.
That move almost certainly triggered stop losses for short positions held above $9340.
If the bulls do not quickly follow through with momentum up, then sure enough we could see another decline in price with many traders left in negative positions.
And looking at the current candle we see resistance starting to set in.
This is why lower time-frame trading can be so risky, cause money to be lost, and why Team Sparkster advocates a diligent approach to historical backtesting of particular trading strategies.
Specifically, the 2-week chart for bitcoin shows a lot of pressure to the downside. Sudden 2-hour burst rallies may not be sustained market moves.
Remember, most people eventually lose money attempting to trade on the financial markets. If you really want to play in the major leagues for sustainable profit, you need the tools and techniques to help you do so.
Momentum is starting to look better on mid time-frames so a new analysis to follow soon.