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Tuesday Inferno market update

Tuesday Inferno market update

Analysis

TL;DR We’ve seen $4k again for the first time since Christmas Day. Is the bull back?

 

After a lacklustre start to 2019, with volumes dropping, Sunday night saw a sharp uptick to $4,090 (Bitstamp) as bitcoin powered $250 higher in a single hourly candle. Given that it’s been two weeks since we fell out of the $4,000 range, that’s good progress. It’s also above the 50-day moving average, which hasn’t happened since early November (and that was a bull trap). As ever, though, we need to be cautious: this is a critical time, as the market makes up its mind whether the bull is back or whether we need to drop lower for final capitulation first.

 

Over the past few weeks, since it crashed through support at $6k, bitcoin has been extremely volatile due to the lack of historic support and resistance in the $3-6k range. New support and resistance levels have gradually been formed as price discovery takes place. We now know there is strong support at $3,200 and further good support at $3,600. However, there is also significant resistance at $4,250, and that’s what we’re targeting next. There’s further resistance at $4,600. Higher still there are going to be significant barriers, but one thing at a time.

 

Bitcoin has managed to hold around $4,000 and is forming a falling wedge. These are bullish more often than not; should it break to the upside we’d expect to push through the immediate resistance at $4,250 – which would then become support.

 

Zooming out to the daily, we may have a bullish inverse head-and-shoulders forming: a reversal pattern. There may also be a tentative cup and handle, also bullish. Either way, we’re really looking for a break of that $4,250 resistance and close above it for greater confidence. Should bitcoin break lower, then we could well see a return to the bottom and a continuation of the bear trend. We should bear in mind that while breaking the 50-day moving average is good, we need to stay above it and consolidate gains – and ultimately push through the 100 and 200 DMAs (currently at $5,000 and nearly $6,000 respectively) to seal the deal. The last break above was a bull trap, and previous breaks above it this year have been rejected at the 200 DMA.

Lastly, Ethereum Classic has been in the headlines for the wrong reasons. The original Ethereum has been the target of a 51% attack, with successful double spends leading to the theft of 88,500 ETC, worth nearly $500,000.

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