Hi everyone,
Yesterday was an interesting day in cryptocurrency land. We had a decent drop from around 10350$ to a low of 9750$. Around 96 million dollars in longs got liquidated on Bitmex ! I can imagine that people are in doubt and not knowing what to do. Should you buy this dip, should you sell off what you are holding or trading ? These are valid questions that you can ask yourself after a red Saturday. Bitcoin and altcoins were due for a correction in my opinion and the question is will the correction continue or was this it ? I will also show you in this article why I believe we are in a bull market.
If I look at myself and what I have learned over the last couple of years, I see that I no longer care when Bitcoin drops 4 to 5% and when altcoins drop at the same time 8 to 10%. I actually get excited when this happens, because in a general uptrend (I believe we have entered a bull market, I will show you this in my last image in this article) you buy the dips ! This is exactly what I did and this makes me proud, because in the past I would have been afraid and would stand on the sidelines waiting and waiting. Maybe it is going to drop further, but you can think this all the time. Can you actually say with exact certainty where the bottom is going to be ? No you cannot. When it starts rising again you are still going to wait, because the train left the station. It is very important to Dollar Cost Average in. Yesterday I decided to buy the dip and I bought several altcoins that still seem very low in prices (when looking at it long term). If it is going lower, I will not mind at all, I will buy in these altcoins again. Every time you will lower your average buy-in, so it is important not to go all in the first time. Put for example 25% of what you want to put in a specific altcoin and if it goes lower you put 25% in again, etc.
Obviously, when you are going to follow this logic of 25% (this is just an example, you can do different percentages of course), you have to have a plan ready beforehand. How much money are you willing to put in one specific cryptocurrency that you believe is going to moon in the future, when do you feel (in terms of charting supports and resistances and indicators) is the right time to enter 25%. I tend to look at Bitcoin the most when charting and I see an important support around 9700/9600$. The 9600$ especially was quite some resistance and this should normally turn into support. When I saw a drop in BTC to 9750$ and it stopped there, I felt it was a good time to enter some altcoins that were dropping nicely as well. 9750$ for me is close to 9700$, so I do not mind enter a little bit higher than a support level. Altcoins tend to follow BTC a lot, so when I saw they stopped dropping as well, I decided this was a good time to enter. In no means does this mean that we will go up from here, but I feel comfortable entering already for a first 25%.
When I look at Bitcoin, we created a hidden bullish divergence on the 4-hour chart :
We are in an uptrend (higher lows, higher highs), so if the RSI is going down in between two points (you can see the arrows that I put), but price is showing higher lows between these two points, you can say we have hidden bullish divergence. This usually means we should see prices heading upwards. This was a reason for me to enter a part of my money in some altcoins, since they follow BTC. I can see Bitcoin moving back up towards 10.100/10.150$ level to fulfill the hidden bullish divergence, but after that it is important to claim back the 10.300$ level, otherwise I will see BTC moving back down again and this time it might move towards the 9600/9700$ level. Hopefully it will hold there, but if not it can go lower to the 9200$ area and even further down towards 8500$ area. This would be other opportunities to buy the dip. On the daily chart of BTC I can see another hidden bullish divergence :
This one is harder to see, but from the two points I show, the price of BTC went from a low of 9736 (10th of February) to a higher low of 9750 (yesterday’s low), which means the price is a little bit higher. On the RSI you can clearly see a lower low. Since we are in an uptrend, this is seen as hidden bullish divergence. Hopefully this can propel us back above 10.300$ ! However today’s daily candle is going to be important, because it should not brake the low of 9736$, otherwise I think the hidden bullish divergence on the daily will be cancelled.
My last image will be showing why I think we are in a bull market :
When I look at this weekly chart of Bitcoin, I see a clear downtrend from the highs of end 2017 (20.000$) all the way to 3100$ in 2018 (the bottom for now !). We were creating lower highs and lower lows (bear market). In 2019 we climbed all the way up to 14.000$ which for me created a higher high, since the last high of around 8500$ in July 2018. You can even say it took out the highs created in May 2018 of around 10.000$ and the high of February 2018 which was around 11.770$. After this it was very important for Bitcoin to create a higher low, because creating both would mean a trend reversal ! Bitcoin went from the low of 3100$ to a low of 6400 in December 2019. This is a higher low and we clearly rallied from this 6400 level. On this weekly chart we might see a wave 1 of the Elliot wave structure from 3100$ to 14000$ and a wave 2 from 14.000$ to 6400$. We might well be in the beginning of a wave 3 !
Conclusion is that we created a higher high and a higher low on the weekly chart. This should mean the beginning of the bull market and this means for me buying the dips !
This is no financial advice and I am not a financial adviser. Please do your own research and make your own decisions.
