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A few days ago, Bitcoin shed a ton of it's weight in terms of price. A lot of investors were caught buying at $10250, hoping to eventually short at $11000 and make very decent gains.
But the bears had their way and plummeted the price by 5% that day alone.
Today, we see Bitcoin trading in very low ranges we all thought it had finally left behind. Bitcoin has dropped more than 13% since it's great fall from 10500 USD. What the heck is Bitcoin doing?
Well, I have done the analysis, and you're about to read it fully in this post. In simple English, of course.
If you have been reading my latest posts, you'd have seen that I have been shaming technical analysis of late. True as that might be, I cannot dispute it's uttermost usefulness in analysing what Bitcoin has been doing of late. Let's set my newly found dislike for technical analysis aside, and see the bigger picture.
But, as always, and extremely importantly, here is an hourly chart if Bitcoin against the US Dollar Tether, coming from Binance Exchange.
Bitcoin is down 0.55% today. But we're not so much interested about today. We're interested about the past.
Let us back track to when Bitcoin fell. Here's another chart, but showing that fateful day last week's when Bitcoin went from obese to underfed.
As we can clearly see, the move up to $10500 was made by a very bearish candle, with a very tall upper wick. Usually, very tall upper wicks characterise high selling pressure, which leads to a significant drop in price, as we are currently experiencing.
Bitcoin oscillated for about a day, trying frantically to get back to it's highs. But the buyers were phased out already.
As we can see from the chart, the volume of the sell off that accompanied the move up to $10.5k was very, very high. In fact, no volume wick was as high as that for days.
The RSI also kept on descending as price ranges between the bottom and middle Bollinger bands for a while, before switching it's range to be between the upper and middle bands. Usually, a switch like this signifies an uptrend, but the RSI was against this fact, as well as the obvious bid and ask.
Subsequently, the bands proceeded to squeeze which usually indicates a breakout. However, although the overall trend was up, the breakout occured to the downside, because of the previous characteristics I talked about.
This sharp drop in price was accompanied by a reversal to about half of the drop, but the buyers were already completely finished. The sellers and shorters then had a field day destroying all of January's gains.
So what will happen next? You ask.
As I always say in my analyses, predicting the price is suicide. But, of course we will proceed with a "prediction".
Scrolling back up to today's chart, the bulls have covered a lot of the ground lost in the past days. The price has currently tested the newly found resistance at $8990 twice now, on the verge of a breakout to $9000.
Should the price test this level one more time, a breakout to 9000 would occur(theoretically). Then BTC would have the hurdle of closing above $9120 which has been a very strong resistance in the past. Once it can close above that price, the rest is easy and the move back to $10k will be imminent.
But here's the bearish bias that no one wants to hear.
Should BTC fall back to $8200, which has been a resistance turned support in the past, it will definitely erase all of the bulls' work to this point. The next support would be at $7800, at which point, Bitcoin would have finished it's accumulation phase and would solidly be in a downtrend.
Remember that all these are not financial advice and should be taken with a grain of salt.
Thanks for reading, and don't forget: For a limited time, get a reward when you download the Trust wallet! You don't need to make any transactions with it, just download and set it up. Do that here and claim your free reward!