Bitcoin price has bounced from yesterday’s low and exuberant buying is trading price higher. For now the indications are that price is advancing in a correction – a bull trap.
Time of analysis: 15h00 UTC
From the analysis pages of xbt.social, earlier today:
The wave up has reached our expected target but we now face a dilemma: The last hour’s candle closed above our designated contention zone. The implication is that this wave could push to the red 200MA in the 1-hour chart, and it is way more risk than we should tolerate.
A buy signal is forming under price in most exchanges’ 1-hour chart and this could provide the impetus for price to continue higher. Although we see indications of price being overbought, this condition can continue much further than we have stop loss distance.
Many of us may have stop losses at levels that allow advance to the 200MA but the recommendation here is to close position, below entry level, and to rebuild the position from higher up.
RSI and the stochastics (top) are reverse diverged to the previous high (indicated with magenta arrows) and still the market continues buying price up. There is a lot of indicator room until price reverse diverges to previous indicator tops, and that is a risk. The caveat is that reversal may be imminent – the circled cross-over is bearish – but we have seen price retarget the red 200MA during previous corrections. Choose an absolute level according to your break-even price and close if price hits it.
Should this be a reversal to the upside – and there is not yet any reason to believe it is – then we will look for signs of confirmation of advance and change direction.
The CNY exchanges and OKCoin futures charts have paused their advance but Bitfinex, Bitstamp and BTC-e seem to be on a stampede and could drag the rest of the market along.
You’ve gotta know when to hold ’em, know when to fold ’em; know when to walk away, know when to run. – Kenny Rogers (The Gambler)
The longer term charts still look bearish. The cross-over of the 1-hour 200 period moving average below the 800 period moving average in the chart above is only one example. The daily chart shows some distance to support, above $210, so we remain bearish until the chart technicals indicate otherwise.
Bitfinex orderbook depth and Buy/Sell Volume:
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Bitcoin price charts from TradingView.
Image from Shutterstock.