Monday, April 16, 2018

Bitcoin price falls back below $8000 handle but the real test will be to cross and hold $8500

Who would have thought that a decentralized security like Bitcoin would have become manageable through technical analysis?  But alas, this is exactly what is happening now that Wall Street has gotten their hooks into the cryptocurrency.

Because of its low supply nature, Bitcoin and most cryptocurrencies should have exhibited a more random trading flow since it was supposed to be outside the purview of sovereign governments and regulated markets.  But all this changed back around Dec. 17 when the CME initiated its first futures contract on Bitcoin, and since then its trading action has followed very much a controlled flight path.

So with this being said, nearly all prognostications for Bitcoin 'going to the moon' have this far been incorrect, and instead those few traders who have cracked the crypto's technical movements have done quite well in using short-term ranges to buy on the dips and sell on the resistances.

On Friday a new investor came in and bought a decently sized position into Bitcoin which caused the price to spike $1000 in less than an hour.  But following this, the amount of trading volume was rather tepid, and makes the $8500 level a difficult resistance to crack.

A move above resistance at $8,500 would provide confirmation bitcoin's bear market has ended, the technical charts indicate. 
Over the weekend, the cryptocurrency clocked a three-week high of $8,458 on Bitfinex, adding credence to the short-term bull reversal confirmed last Thursday. Further, the 30 percent rally from $6,425 (April 1 low) proved that the much-feared "death cross" indicator was in fact a bear trap. 
Still, the job is only part done, as bitcoin (BTC) has yet to violate the descending trendline established since Dec. 17. - Coindesk
With its low supply, it doesn't take alot of volume to rapidly move the price higher or lower.  However over the past few months, trading volumes have fallen precipitously as the euphoria of the Bitcoin bubble waned, and this has led to thousands of speculators fleeing the market as prices fell by over 70%.  And what remains are primarily day traders who use the loss in volatility to skim profits from the short-term ranges that have appeared in the crypto's analysis.

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