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Analysis

Friday Inferno market update

Fundamentals and technicals are both looking bullish, folks!

 

Bitcoin faltered earlier this week and it looked like we were set to break support and head down to the next level, potentially a fall to around $6,800. In the event, though, bitcoin held the 23% fib level and support at $7,700, and then ultimately reclaimed the $8k line. It is now trading above $8,200. Ignoring the short blip to $9k, this looks a lot like the ceiling on a rising wedge stretching back a month, and breaking it would likely mean BTC saw $9k again.

 

Looking at the 1-day chart, the bullish picture becomes clearer. Bitcoin is trending upwards, holding a rising support line established at the beginning of May, when BTC went parabolic. While the parabolic run appears to have topped out, we’re still respecting that line and in solid uptrend.

 

Daily RSI is now neutral and gently moving higher – we’re not yet seeing the wild swings that so often result in violent reversal. So far, this is measured and sustainable. (Breaking $8,200 convincingly might change that picture, of course.) It’s worth noting that earlier this week, when RSI dropped to 47 – still not oversold – it was at its lowest since February. Our key moving averages – 50, 100 and 200-day – are rising to meet the price, with the 50-day now around $7,300. That should further strengthen support as it catches up.

 

On the weekly, RSI is reading overbought again, having only seen one red week in the past seven. But RSI can stay overbought on the weekly for a long time with bitcoin, as the previous bullrun shows.

 

On the fundamental side, there is the news that Big Money has been accumulating crypto on a large scale, with ‘Firm-sized’ accounts of 1-10k BTC picking up around 450,000 BTC since the December bottom. This is extremely bullish, since it indicates that smaller retail holders have barely started to buy yet.

And finally, and also bullishly, at long last we have news of Bakkt. The company will start testing bitcoin futures on 22 July, opening the way for institutional investors over the second part of this year.

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Tuesday Inferno market report

TL;DR consolidating above the 23% fib – for now…

 

When bitcoin failed to hold $9k, it was clear that the parabolic advance was over. Many analysts have cautioned that bitcoin is due a heavy correction. Parabolic rises are unsustainable, often giving up the majority of their gains. In this instance, that could mean a fall back to around $6,000.

 

There are many reasons why $6k is of interest:

  • The parabolic rise started in earnest just below this level
  • $6k is the zone of strong support established in 2018
  • The 100-day moving average is now approaching this area
  • It marks the 50% fib level, from the low of December 2018 to the recent high of $9,100.

 

Overall, $6k should prove excellent support, with multiple converging signals suggesting that price – if it goes this low – will have a tough time breaking lower. In other words, it may – may – be a good buying opportunity.

 

So far, though, this hasn’t happened. Instead, bitcoin appears to be consolidating above the 23% fib level, which lies at $7,700. We have bounced off this line multiple times on the daily. At the same time, bulls are struggling to push bitcoin above $8k. There is a narrow range within which BTC is trading and when it breaks – one way or the other – it will likely break hard.

 

To the upside, we’re looking at $9k+ and the recent high, ideally looking to break that and continue the rally higher. To the downside, we have $6,800 (the 38% fib and top of the 2018 support zone) and then $6,000.

 

The 50-day MA is advancing higher, and after our Golden Cross earlier this year we would expect a retest of that. It may help provide further support. The fall may never happen – and remember, when ‘everyone’ thinks something is going to happen in a market, the opposite happens. However, the picture as things stand is broadly bearish, in the medium term.

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Inferno Friday market report

Bitcoin has steadied after its recent falls. We explore what might happen next.

 

There’s no denying that bitcoin has had an outstanding year. After 2018 proved so miserable, this year has been quite the opposite, with bitcoin almost tripling from its December low to hit $9,097 (Bitstamp) last Thursday.

 

However, $9k was immediately rejected, with bitcoin crashing lower in two waves – the first to the support zone at $8,000 and then, after a recovery, a further drop to a local low of $7,433. At the time of writing, bitcoin has again stabilised around $7,800.

 

Volumes have dropped off and RSI is neutral on the 1h, 4h and 1-day. On the weekly, it is still only just coming out of the overbought zone – several weeks of strong action has that effect.

 

Looking at the 1-day, BTC has found support at the $7,600 region. The 50-day moving average is also moving upwards quickly, currently around $7k. That tends to act as support in a bull market. (The 200-day MA is still far down below $5k, but has started to curve upwards.) Having seen our golden cross at the end of April, a retest of the 50-day MA would be reasonable. That may not require further falls in BTC; it may be enough to hold the current range while the MA continues to rise.

 

The question is whether bitcoin is now consolidating before recovering $8k – and beyond – or whether this is a temporary pause before another fall, likely down below $7k. The next major support is around $6,800. This was the top of the band where BTC traded for months in 2018, and lines up with the 38% fib level from the December low to the May top. Fibonacci levels overall line up very well with known support; the 23% fib coincides with $7,600, where we recently found support, and the 50% fib lines up with $6,100, at the bottom of that zone of activity, and where BTC flash-crashed in May.

 

A larger pullback might be expected, since parabolic rises almost always give up the majority of their gains. However, sentiment is stronger about bitcoin than it has been for almost two years. All we can say at this point, is that if BTC breaks one zone of support, the next one should be clear thanks to the multiple different indicators that come together: $7,600, $6,800, $6,100.

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Tuesday Inferno market update

We knew the correction was coming. We just don’t know how far it will go…

 

Bitcoin is back in the red. After a doji candle on the weekly – a sign of the market’s indecision – the price faltered and finally crashed. At the time of writing, BTC is trading at around $7,900, having hit a yearly high of $9,097 last week and touching a low so far today of $7,730.

 

This should not come as a surprise. We know that parabolic increases are unsustainable. Bitcoin spent just minutes above $9k. We had bearish divergence on the 1-day chart. This has been coming a long time.

 

So the question is: where will the falls end?

 

You can never predict the market, but you can take educated guesses, reduce risk and maximise opportunity. So here’s how it looks:

 

We have support at $7,600, coinciding with the 50% fibonacci retracement from the recent move above $9k, starting from the recent pullback to $6,200. But very likely we need to look at the bigger picture here, because this feels like a more significant wave in the market’s development.

 

If we look at the whole rise, from the very low of $3,100 up to the high of $9,100, we can see that we have our 23% fibonacci level around $7,700, which coincides with existing support. There is also good support in the $8k zone – but for the time being, that has turned resistance since we are trading underneath it. We’d ideally look to move higher and back-test $8k.

 

It’s also worth noting that there is coincidence between existing support at $6,800, the 50-day moving average, and the 38% fib from the whole year’s run-up.

 

Further down, $6,100 lies at the 50% fib and, of course, is within the strong support that was established throughout last year and checked only recently. That seems like a reasonable target for this retracement – though as ever, this is not trading advice and is offered for information only. Finding support and consolidating here would be very bullish.

 

Why? Because this is how bear markets end. A downtrend, followed by a crash to a new low: capitulation. A bounce from the low, a break of resistance (established by old support), and then a back-test of that resistance as new support. In our case, there was resistance at $4,200, but stronger resistance in the $6k zone. Testing that and moving back up would be confirmation that the bull market is on. It would also prove a very attractive risk/return point.

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Friday Inferno market round-up

TL;DR it finally happened. Did you catch it?

 

The long-awaited dip has finally occurred. At this point in time, bitcoin does not seem to be making measured moves. Instead, it soars by a thousand dollars a day, then consolidates a while, and then it’s another massive move up. Conversely, when it falls, it really falls hard.

 

Yesterday we saw BTC break up out of its downwards consolidation flag to put in a new high for the year: $9,097. The $9k area has been a magnet for price, with momentum suggesting that bitcoin would make at least one more leg up before correcting – something that was long overdue.

 

We have seen one mega-correction before recently, two weeks ago today, when bitcoin dropped $2,000 in a day, including $1,000 in a matter of minutes. This correction was less severe, but BTC still fell over $1,000 from its peak. The bottom so far has been $8,000 dead. So, what is next?

 

We’re of the opinion that this actually changes very little. We knew that a correction was needed, and while $1,000 is a lot, it doesn’t put the uptrend in any danger. Even if the price fell back to $6,000 – a 33% correction from the top – we wouldn’t be worried. That would arguably be very healthy for bitcoin. When the market rises so far and so fast, there needs to be some kind of retracement. If there isn’t then the uptrend is not sustainable, and will end sooner than we want. If this is the start of a multi-month or multi-year bullrun, there will be pullbacks here and there.

 

With that in mind, we can look for much the same targets as before. $6,000-$6,800 is our strong support zone, where bitcoin spent so much time in 2018. Bouncing off this would be a sign of strength, especially if it was a higher low – above the $6,178 of 17 May. To the upside, we’re looking at $9k once again, now established as resistance, and of course $10k.

 

The one thing we do know for sure is that there will be volatility. We’re probably looking for another large leg down, or else a ‘Bart’ formation back up to $9k. At this point, it’s impossible to say which it will be.

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Tuesday Inferno market update

Last week ended with a bang – again. This one could shape up to be something special. One thing’s for sure: it’s going to be volatile.

 

Bitcoin is taking another breather after pushing upwards to another yearly high on Monday – $8,939 on Bitstamp. Right now it’s trading around $200 lower than that, which represents an entirely reasonable pullback after the $900 move we saw on Sunday night and the early hours of Monday morning.

 

And so we’re back where we have been many times already over the last couple of months. Bitcoin has put in a gravity-defying leap higher, and is consequently overbought . Daily RSI has spent most of the last two months above 70, the weekly is currently at 79, and while the lower timeframes are coming back down from overbought now, they have almost run out of room to go higher at times.

 

In short, a pullback is absolutely to be expected. And yet, we’ve been here many times already and exactly the opposite has happened. Despite being massively overbought, profit-takers have not proven equal to new buyers.

 

Now at some point – some point – the situation must change. Bitcoin must correct sooner or later, even if it’s after putting in a new all-time high (though we’re fairly sure it will happen long before that). But bitcoin keeps confounding traders and conventional wisdom by shrugging off the technicals and putting in another leg up.

 

What are the key areas to watch for now? Obviously we are close to $9k. The $9-10k zone is a natural target, with the round number acting like a magnet, as well as this already being an established resistance zone. If we do not get a pullback before breaking $10k, it will be truly remarkable. And once $10k is gone, there is comparatively little resistance at all – some at $12k, but then practically nothing to $20k (and then nothing at all above that).

 

Below, we’re looking at the low-$7k level for support, and then the $6k region should provide some strong support should we need it. It was there for us many times in the long bear market, and should be there again if bitcoin dips that far.

 

For now, all bets are off and conventional thinking doesn’t seem to apply. Bitcoin could soar past $10k, or it could crash to $6k. Neither would surprise us.

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Friday Inferno market update

A consolidating triangle is set to break, and the result could be exceptional – one way or the other.

 

Bitcoin has seen plenty of volatility over the past few days, with large swings up and down. In the last 10 days we have seen prices as high as $8,391 and as low as $6,178. We’ve seen what appears to be a double top, with the succession of lower highs very clear on the 1-hour chart; conversely, we’ve also seen a strong recovery from the fall to $6,200, with excellent demand below $7k. When a trader dumped 5,000 BTC on Bitstamp, traders took it as an opportunity, soaking up demand and driving the price back up by $1,000 in a matter of minutes.

 

And so here we are, with bitcoin sitting around the $8k mark, oscillating around that line. A roughly symmetrical triangle can be seen on the 1-day chart, starting with the parabolic move that happened a couple of weeks back. The top of that triangle is around $8,100 at this point, or the bottom around $7,500.

 

We can expect a breakout soon, and when it happens, it will likely be epic. Moves that happen on the breakout from such triangles tend to be as large as the starting height of the triangle – in this case, around $1,500. That would take bitcoin to almost $10k – call it a round $10,000, since traders love round numbers – assuming it breaks up. If it breaks down, then we’d see more like $6,000.

 

The thing is, either is possible. We have technicals pointing in both directions. The parabolic run-up begs for a correction, and there is bearish divergence on the 1-day chart. RSI is overbought on the weekly. On the other hand, the trend has been strong, there is a lot of buzz around bitcoin at the moment thanks to Consensys, Fidelity, Facebook and other events.

 

If bitcoin corrected to $6k and held that level (as seems quite likely), it could be extremely bullish. At the moment, bitcoin feels overextended. Markets love to retest old support, and $6,200 is the strongest support bitcoin has ever had. If that happens, it will be a huge fall from where we are now, at $8,000. But it will set bitcoin up for an enormous move to the upside afterwards.

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Tuesday Inferno market report

Bitcoin has found support at the $7,800 level, but the medium-term direction is unclear.

 

In a strong finish to last week, bitcoin ended Sunday at $8,300 – very close to its year’s high. This unexpected close meant gains of around $1,200 for the week, about the same as the week before. This bullish move might take BTC up to the $9-10k region, but there are equally factors that suggest the momentum might be dissipating and it might finally be time for the correction.

 

Any parabolic move like we have just witnessed should lead to a pullback: the market is too over-extended and overbought, and there is simply too much risk involved in being a buyer. Traders naturally take profits, which results in at least a short-term dip. In this instance, the move up to $8,300 also describes a double top. At the very least, we have established clear resistance at $8,400, and it will take an extra push to break through that.

 

RSI on the 4h is drifting back to the median, 50, while on the daily it is only just dipping out of overbought territory. On the weekly, RSI is still above 70, also suggesting it is time for a pullback. While in a bull market, weekly RSI can remain above 70 for weeks at a time, this is the first time that it has touched 70 since the peak of the bubble in December 2017. It’s likely that this time, it will be a little more tentative – touching 70, backing off, and then pushing higher again. As ever, 2015 offers an interesting precedent (though history does not always repeat itself exactly). In November 2015, weekly RSI climbed above 70, dipped and then recovered above 70 again, ultimately then staying above 50 until the bubble burst.

 

That would be a good scenario here. Any market that overextends too fast is liable to turn bearish, and it is surprising that we have not seen a major correction yet – especially given the news that the SolidX-VanEck ETF has again been postponed. This was likely priced into the market, though there had been some expectation of a different outcome this time.

 

For now, we can see that the dips are being bought in the $7,700 range. On the recent crash, the 50-week moving average held. All this is bullish – but we need a push higher into the $8,500 range to confirm that. In the immediate term, sideways trading and consolidation would be positive.

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Friday Inferno market update

Bitcoin has made its expected correction and bounced hard.

 

It was bound to happen, and it’s best to get it out of the way. We knew bitcoin had to retrace – the question was always how much.

 

In the event, it turned out that the crash sent it almost $2,000 lower. The final leg of that was a drop of $1,000 and a bounce from support right back up to where it started – all within the space of 30 minutes. The resulting doji candle was impressive, and price has stabilised in the $7,200 -7,300 region for now.

 

So, what next, now that the parabolic trendline has failed? We would expect a period of consolidation here, though of course another fall is not off the cards. The market has tested $6,200, which is right within the old support region from 2018. It may test it again, in which case we’ll be looking carefully at volumes (the last doji was on high volume, which is reason for confidence) and whether bitcoin puts in a lower low or a higher one this time.

 

If it breaks $6k, we might see a drop to $4,600 or even $5,000, where support lies. $4,200 would be support below that, but that would erase all the gains of April and May. To the upside, we now have $8k as resistance, and then a shot at $9-10k. It now looks like that may take some time as the heat has dissipated for now.

 

Zooming out to the weekly, bitcoin is still well above all the major moving averages, though it briefly dipped below the 50 WMA earlier today. The daily candle will be interesting; currently it is a red candle with a long wick down, and should it also close as a doji – price rising to perhaps $7,600 or $7,800 before midnight – we would consider that very bullish. In short, sellers didn’t have the confidence to keep going, and there were lots of buyers willing to pick up bargains below $7k.

 

We’re likely in for continued volatility, but for now, RSI no longer shows oversold on the higher timeframes and the demand for BTC was encouraging. The uptrend is still in force.

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Tuesday Inferno market report

Bitcoin is maintaining its recent policy of just not caring.

 

Many of our community will be suffering from oxygen deprivation as the G-force of bitcoin’s upward movement cuts off the blood supply to their brains. For those still conscious, here’s what’s going on:

 

Yesterday saw bitcoin soaring another thousand dollars, at one point topping $8,000 before closing slightly below. Today has seen the same action continue, with the price at the time of writing almost $8,300. (This is likely to go out of date fast.)

 

At every step since the beginning of April, we – in common with every other analyst – have expected a pullback, or at least a period of consolidation. It hasn’t happened, not for more than a few hours. Every resistance level has fallen, bitcoin slicing through them like a hot knife through butter on a warm day in the Sahara.

 

There’s little resistance to $10k now, which itself can only really be considered resistance as a psychological level. Given the strength of resistance at $6k and how long it should have taken bitcoin to break it, we can’t assume that any other resistance zone will prove a problem. We know that there must be a pullback sometime – there must be. But we can’t suggest with any confidence where that will be. Bitcoin has torn up the rulebook in the last few weeks, and conventional market patterns have been meaningless.

 

While a brutal correction ought to be on the cards – we’ve had no pullback since the dip to $5,000 in late April – we just don’t know whether it will happen here, at $10k, at $20k, or higher. Once we top $11-12k, there’s very little in the way of resistance at all, just clear blue sky above.

 

As good as it’s been for bitcoin, it’s been bad for the alts. They have suffered badly in BTC terms: no one wants to be out of BTC here. Most have held level in USD value, at least. When bitcoin finally pauses we might see the fabled Alts Season, but again – we can’t know when that will be.

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