Bitcoin rallied on Thursday, initially pulling back before breaking above the $16,000 level. Bitcoin continues to fend off the sellers and rise to new highs, despite Bitcoin being officially "overbought" for a few days now.
(November 12, 2020 9:30 PM EST)
Outlook: Bitcoin rallied again on Thursday, shedding off the sellers and breaking above the $16,000. Dips are clearly buying opportunities at the moment, as they have been. As noted above, Bitcoin is overbought and has been for a few days now, with the RSI reading 84/100 on the daily chart. This indicates a market is overbought and, along with other conditions, can precede to a pullback. However, crypto has defied the odds, with much of the late 2017-2018 bull run occurring and sustaining in the 'overbought' market condition as prices climbed without reserve.
I think a pullback is inevitable, not necessarily tomorrow, but I think that's an opportunity to BTFD, not to short. I have no intention to short Bitcoin or any crypto for that matter. I think buying right now above $16,000 is chasing the trade; best to wait for a pullback and get some value.
In the traditional markets, equities and Bitcoin's cousin gold continue exhibit weakness, selling off into the close. Bonds look primed for a late year rally as does the DXY, so this alignment has some implications for Bitcoin as we have noted in previous analyses.
Support: Look for support between $13,000 - $14,000. Below that, added support around $12,000, $11,000 and ultimately $10,000. The lower Bitcoin goes, the higher the chance of a violent bounce. I don't anticipate very deep retracements here; in fact I'll be looking to DCA in any and all pullbacks.
Resistance: $16,000 is near-term resistance for Bitcoin. If Bitcoin breaks above there, there's a pretty open field until $20,000 with no psychological barriers or significant Fibonacci price levels. I expect fortuitous resistance at $20,000 which probably causes a couple of rejections. Once it gives way, next target is $25,000 and then $30,000.
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