The bitcoin price on Sunday surged as high as 7.7 percent against the US dollar backed by a bullish yearly prediction. The bitcoin-to-dollar rate established its intraday peak at $4,085 but underwent a minor correction action to trade at $4,051 at press time. The pair…
The bitcoin price on Sunday surged as high as 7.7 percent against the US dollar backed by a bullish yearly prediction.
The bitcoin-to-dollar rate established its intraday peak at $4,085 but underwent a minor correction action to trade at $4,051 at press time. The pair had been attempting to break through $4,000 since December 28, but a stronger selling sentiment near the area rejected upsides on four occasions. Today was the first time bitcoin came closer to testing its two-week high at $4,244.
Weiss Ratings, a Florida-based financial rating agency, said that more people would start treating bitcoin as a store-of-value asset in 2019. The agency explained that storing bitcoin – unlike gold – costs nothing and it is easily transferable, verifiable, secure, and unseizable by any government.
“No other asset provides that combination of properties,” Weiss stated. “And consequently, no other asset can currently compete with bitcoin as a store of value. Result: bitcoin is on its way to becoming a veritable digital gold.”
The interim fundamentals improved the technical patterns in the bitcoin market. The bitcoin-to-dollar pair clearly attempted an interim breakout action above the neckline of the inverse head and shoulder pattern, as we had discussed in our previous analysis. The upside also confirmed its 50-period moving average (depicted in the blue curve on the daily chart) as strong near-term support. Day traders can watch the level for a potential short position on the first sign on downside pullback.
The Relative Strength Index momentum indicator is confirming a neutral bias after overstaying inside the 50-60 area. Bitcoin can expect to rally towards $4,500 if the RSI jumps above 60. But since July 2018, the indicator has not entered its strong buying sentiment zone. This historical behavior could eventually influence bears to gear up their action towards the current resistance levels.
The latest upside action allowed us to exit our long targets on a profitable note. It has also brought bitcoin to a new price range, which allows us to settle new interim parameters to each side. As of now, we are now looking at $4,000 to hold the pullback attempts as interim support. To the upside, we are hoping $4,244 to cap the bullish attempts as interim resistance.
Our first position begins with a long order towards $4,244 with our stop loss target placed near $3,900. We are also looking for a potential downside correction, which would have us wait for bitcoin to break below $4,000 first. When it does, we will open a short order towards the 200-period moving average (depicted in the red curve) while maintaining our stop loss 1-pips above the entry position.
A breakout attempt from $4,244 will have us enter a long position towards $4,420, our upside target and the resistance level from November 29 price action. A stop loss just 1-pip below the entry position would minimize our losses if the pullback action occurs.
Featured Image from Shutterstock. Charts from TradingView.
Last modified: January 24, 2020 10:52 PM UTC