Are you prepared for the next big move?
Bitcoin staged an impressive rally to $11,200 at the weekend, pulling back a little to consolidate around the $11k mark. After such a massive parabolic move, this is strange. Usually, parabolic rises retrace the same way as they went up – fast. In this instance, the largest pullback has been less than $1,000. Within the space of a single 4h candle on Saturday, bitcoin touched $11,200, fell to $10,255, and recovered almost back to where it started in a superb doji.
It seems that traders are unwilling to sell and be caught on the wrong side of another parabolic rise. On BitMex, longs and shorts are roughly equal. It’s also worth noting that BitMex has set a new record for daily volumes: interest has certainly returned to crypto.
The most recent leg of the rally may have been helped by Facebook’s Libra announcement, which serves to legitimise crypto to the mainstream and give more exposure to the idea – including bitcoin. But there has also been increasing organic demand, including from India. Despite the draconian ban on bitcoin ownership, Indians are buying bitcoin to protect their wealth amid a slide in the value of their currency and poor economic performance.
Right now, bitcoin is trading at $11,300, another yearly high. RSI shows overbought on every timeframe. The daily and weekly charts briefly dipped below 70 (overbought) before continuing their rise, while on the 4h, the recent picture is even more pronounced. What we need here is some consolidation to allow such indicators to relax, but that doesn’t appear to be happening. Consequently, we have to expect another parabolic move – either up or down.
To the downside, we know where support lies: $11k, $10k, 9,300, 8,000. Above, we’re now closing in on historic resistance in the $11,500–$12k region. That’s really the last major resistance before $20k.
One final point worth noting is that Google search traffic for ‘bitcoin’ is only just starting to pick up. It is well below the 2017 peak. This indicates that retail interest in crypto is minimal, but finally increasing.
Red hot news, scorching wit and searing opinion pieces from Crypto Inferno.