The bulls stampeded bitcoin price higher in a corrective advance on Monday and ran into a trap of their own making. When exuberant CNY buyers failed to advance price above the 1-day 200MA, the noise in the trading pit awoke The Bear. This analysis is…
The bulls stampeded bitcoin price higher in a corrective advance on Monday and ran into a trap of their own making. When exuberant CNY buyers failed to advance price above the 1-day 200MA, the noise in the trading pit awoke The Bear.
Time of analysis: 15h02 UTC
From the analysis pages of xbt.social, earlier today:
The OKCoin 3Mth futures 1-hour chart and a look at the momentum indicators, to illustrate that this is not yet the time for us to react.
The indicators had diverged on the push higher and on the current pull lower they are being drawn much lower than their previous wave low – reverse divergence.
When we see an instance of divergence followed by reverse divergence this is typically a signal that price will reverse – in this case, to the upside. Price has been unpredictable during this correction and it may continue lower to the 1-hour 200MA and only then engage in the upward reaction. There is just no safe way for us to trade this.
Sometimes it is also a discipline of knowing when not to trade, and this is definitely such a time.
Let’s sit out and keep watching. If price pushes higher we know what targets define the upside. Price will probably make its way there in an erratic path. Eventually, we will get a clear signal when this battle between the bulls and bears quietens down; the correction will be complete and we can enter with confidence.
Be aggressive in a trending market and conservative in a choppy market. – Vadym Graifer
The onus is on the technical analyst to objectively communicate what he (or she?) gleans from the chart’s indicators and price waves. Stating opinions about whether price will go up or down is a prerogative, but experienced speculators know that one analyst’s opinion is meaningless, because at any moment there is an array of potential scenarios probabilities present in the market. Yet, unreservedly, in this anlayst’s opinion: the current price chart is a mess and does not favor profitable trade with the available bitcoin instruments. A Put/Call option straddle would be ideal in this erratic (yet range-bound) market but we’ll have to wait for price to stop zigzagging and to either top out near $250 or to plunge below the BTC/CNY 1-week 200MA (currently at 1470 CNY) before we can confidently nock our arrows.
Bitfinex orderbook depth and Buy/Sell Volume – a buying frenzy:
What do readers think? Please comment below.
Readers can follow Bitcoin price analysis updates every day on CCN.LA. A Global Economic Outlook report is published every Monday.
The writer trades Bitcoin. Trade and Investment is risky. CCN.LA accepts no liability for losses incurred as a result of anything written in this Bitcoin price analysis report.
Bitcoin price charts from TradingView.
Image from Shutterstock.
Last modified: January 25, 2020 11:14 PM UTC