25 C
New York
Saturday, October 16, 2021

Buy now

Chart Of The Day: Bitcoin Could Pull Back Before Possible New Highs

it broke the $ 50,000 mark last weekend for the first time since May 11. This is a spectacular turnaround for the cryptocurrency which, until the end of July, was hovering below $ 30,000.

Although there are no clear fundamental drivers, some cite PayPal’s (NASDAQ 🙂 announcement that it will accept the digital token as a payment method in the UK.

Whatever the catalyst, the digital currency is up for the sixth week in a row, its longest weekly winning streak since the eight consecutive weeks of gains that ended during May 2020.

Although Bitcoin may be preparing to pull back on short-term profit-taking, technical data leads us to expect that it is also preparing to hit new longer-term highs.

He is trading in a bullish channel from his bottom on June 20. The price has just completed its second continuation pattern within the channel. Notice how the bottom of the second pattern extends to the previous one, providing momentum for a continuous rise.

However, just like when an Olympic jumper takes a few steps back to build momentum and speed, the same could happen with Bitcoin.

After the first burst of energy related to the breakout, profit taking – which increases supply – could push the price back towards the pennant bullish. Presumably, investors who missed the $ 50,000 train the first time will be eagerly waiting to jump on board, pushing prices back to where they are now, and even beyond.

The pennant developed just above the 200-day moving average (200 DMA), showing that the level is a pressure point on the technical chart. The fact that prices have risen means that they are improving over the average price of the last 200 trading days. The time frame reveals the importance of this movement, showing its bullish character.

The 50 day moving average (50 DMA) crossed above the 100, which again passed right through the center of the previous descending flag, showing that price as an important level. The price managed to break above the 50-day average and cross above the 100-day moving average to boot, indicating that even the price smoothed by a 50-day average is better than the last 100-day average, another indication of price strength.

The ascending channel, by definition, shows that the trajectory is ascending. However, even when the price is moving you must make corrections within the uptrend to allow profit taking. The price is trading at the high point of the session, but may have encountered resistance from the April low.

The rate of change (ROC) shows that momentum was upward on positive divergence from May’s low, and that the indicator is testing the bottom of its ascending channel, making a rebound more likely than a continued decline. But as long as the descending channel of the ROC (red) remains intact, this is a distinct possibility, especially considering that it provides a negative divergence to the ascending channel of the price during the same time.

The íRelative Strength Index (RSI) is retesting the top of a symmetrical triangle. While a break to the upside would suggest a continued rally, it is overbought and could retest its bottom along with a return movement in price.

Strategies trading

The conservative operators they should wait in a long position for a pullback during which the bulls demonstrate control at the point where the 200-day DMA meets the previous pattern and the bottom of the ascending channel.

The moderate operators they would also wait for a buy dip, if not confirmation of additional support.

The aggressive operators they would enter a contrary short position, selling an expected corrective decline, as the price could find resistance upon reaching the psychologically round figure of $ 50,000 and at the April low. It is essential to have a plan of trading consistent and controlled. Here is an example:

Trade Example – Aggressive Counter Short Position

  • Entry: $ 50,400
  • Stop-Loss: $ 50,500
  • Risk: $ 100
  • Goal: $ 50,000
  • Reward: $ 400
  • Risk: reward ratio: 1: 4

Tammy Sewell is our Writer and Social at OICanadian.com. Tammy loves sports, she writes our celebrities news. She spends time browsing through several celebs news sources as well the Instagram. Email: Tammy@oicanadian.com Phone: +1 513-209-1700

Related Articles


Please enter your comment!
Please enter your name here

Stay Connected


Latest Articles