It has been a wild week for Bitcoin with a ~40% trading range. It was just as Bitcoin was breaking major support and looked sure of making lows, Chinese president Xi Jinping told Chinese citizens to support the development of blockchain technologies.
If Bitcoin cannot bounce convincingly, we will likely head lower over the next few weeks. Our first general support level will be $5,500 and then $3,000. These are just rough guides but for any medium-long term traders, it's important to understand these key support levels.
Ammateur traders often make the mistake of wanting to get into a trade early to get an extra few percent out of the trade - why wouldn't you? The reason is the probability is not yet in your favour.
The last few weeks of cryptos have been extremely interesting - we have seen some serious divergence between Bitcoin and other major coins. Bitcoin has displayed some serious relative strength when compared to its smaller siblings ETH and LTC.
A lot of powerful price analysis will actually be observed during price declines or pullbacks. Comparing the 'relative strength' of these pullbacks is very insightful for the carefully trained eye. So what are we looking for and what is it telling us thus far?
The last 3 weeks action on Bitcoin has been extremely bullish - why you ask? The pullback.
Yesterday we spoke about Bitcoin forming a construction pullback - last night (or day), we saw one of the most 'textbook' setups you will ever see, moving right on cue. We noted duly yesterday the bitcoin was pulling back constructively and was holding the 20MA.
So many traders/investors claim to love pullbacks and end up panicking and selling the low. Sound familiar?
Often at the end of a price move, a panic day of buying will mark a short term top. This is the wide and erratic bar we saw last night that had the highest % move (18% last night on bitcoin) and then closed on or near the low
Cryptos continue to show strong outperformance to other asset classes, with close relatives, equities having a poor session overnight. Crypto as a diversification tool is starting to look more and more appealing to Institutional investors with its clear alpha (Market outperformance) and beta (Risk) properties.