Bitcoin went back and forth on Friday, initially falling before rallying to close with a slightly green candle. This is the third green candle in a row after a significant breakdown from previous local highs. But what does it mean?
(September 11, 2020 9:00 PM EST)
After breaking through support at the 50 Day EMA, Bitcoin found support at the $10,000 level, bouncing from there and is now treading water just above $10,000. This is not a high-volume V-shaped recovery a Bitcoin bull would look for, so the question is what happens next. Based on what we've seen thus far, it appears this is a minor dead cat bounce after a large move down.
Support: There is a lot of psychological support at the $10,000 level so naturally there was buying pressure there, where I'm sure some shorts covered or set trailing stops. I think it's likely we'll see Bitcoin tread water for a few more days, possibly reaching up to the 50 Day EMA overhead around $10,673 where it could test resistance before selling off again to retest the $10,000 level. If that level breaks, then look for support around the 200 Day EMA at $9,394.
Resistance: If Bitcoin breaks above the 50 Day EMA, closing a daily candle above $10,700, look for Bitcoin to test $11,000 again and then $12,000. I don't think this is particularly likely in the short term, as there's a lot of uncertainty in all markets right now. In the medium-term, I think this is a bargain price for Bitcoin and a good time to continue DCA'ing with small tranches.
Weekends are typically lower volume so the selling may continue, though that's not to say it's particularly meaningful; we shall see come Monday. There has been a lot of volatility in the markets and we've seen a re-correlation of Bitcoin with equities and gold, so I would look Sunday night to see what's going on in the Asian markets to see how equities and gold are trading which might signal Bitcoin's next move.
About Us:
I post these insights because I like learning, analyzing data, and taking calculated risks. If the community likes these posts, I will continue posting them on a daily basis. If not, no harm, I will keep them to myself.
