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Chart Of The Day: Why Bitcoin Is About To Fall...Again

Published 20/02/2018, 14:20
Updated 02/09/2020, 07:05

Bitcoin has reached an intersection of sorts, caught between positive and negative forces both fundamentally and technically.

On the positive side, Bitcoin's technology is improving. The cryptocurrency's network is integrating SegWit (Segregated Witness) into its platform. SegWit will enable a separation of signature data from transactions, providing more space for additional transactions on the blockchain. This will allow for a more efficient transfers, which in turn will lower fees.

However, on the negative side, regulators (who are still cleaning up the recent financial fiasco that was the binary options industry) are taking no chances with cryptocurrencies, making sure every necessary precaution is considered. Over the past few months, digital currencies have subject to character attacks from a wide array of sources. Attackers have include financials such as UBS, S&P Global Ratings and Yves Mersch, an ECB senior member, who advocated clamping down on cryptos.

Earlier in the month, Augustin Carstens, general manager of the Bank for International Settlements (BIS), also known as the bank for central banks, as it holds their accounts, called Bitcoin a “combination of a bubble, a Ponzi scheme and an environmental disaster.”

Adding to the mounting list of crypto-naysayers, today, Bank of England Governor Mark Carney told students at London Regent’s University that Bitcoin has failed to qualify as currency since currencies are measured by two essential criteria: they must be a medium of exchange and a store of value – both of which Bitcoin lacks.

Technicals: The Bears Have Brought Reinforcements

Bitcoin 4-Hour Chart

On the positive side for technicals, BTC has been trading within an uptrend for two weeks, since February 6.

Bitcoin Daily Chart

However, Bitcoin has been trading within a downtrend since December 17 when it was at its all-time-high near $20,000. It has reached and even crossed above the channel-top. However, it scaled back into the falling channel, forming a bearish Shooting Star, demonstrating that the bears intend to guard their line-in-the-sand that is the upper bound of the falling channel. The bears have also brought reinforcements.

The 50 dma (green) has been realigned with the bears by the upper bound since late January. It added – or rather revealed – its resistance. The 100 dma (blue) just joined them with the 50 dam at the channel top. The fact that the 50 dma crossed below the 100 dma also demonstrates that price momentum is to the downside.

There is also a clear line of support-resistance at the $12,000 level since late December.

Trading Strategies – Short Position

Conservative traders might wait for a downside breakout of the congestion above the $10,000 key level.

Moderate traders may wait for a close of a Shooting Star.

Aggressive traders may short immediately.

Equity Management

There are many trading strategies available for the same instrument in the same time. A trader must establish a plan, which would include his resources and temperament. This is crucial and determines success or failure.

A classic risk-reward ratio is 1:3. Therefore, entries and exits must be determined accordingly.

Stop-Losses (above levels):

  1. $11,658 – high of today’s Shooting Star
  2. $11,946 – 100 dma
  3. $12,000 – psychological round-number and support-resistance level

Targets (below levels):

  1. $10,400 – range bottom
  2. $10,000 – psychological round-number
  3. $9,000 – January-February support-resistance
  4. $8,400 – 200 dma (red)
  5. $6,000 – February 6 trough

Latest comments

"However, on the negative side, regulators (who are still cleaning up the recent financial fiasco that was the binary options industry)". . Funny thing, he advertise 24option, which is a binary option broker.
I wonder how much did this guy get paid to divulge such misleading information?.  Bitcoin broke that resistance. You just misused that particular moment to make a screenshot when on the chart an inverted hammer was forming just for your own convenience. And quite of a basic analysis you did there too, even a child can draw those basic support and resistance lines. 12.900 is the next target and 16.000 accordingly. Get your facts straight. Psychological numbers have never worked, not even when Bitcoin reached 10.000 from all the way down. Not to mention the strong positive daily volume of 06 February 2018 higher than the volume we once saw when BTC was just in the beginning at around 4000 USD.
Looks like you were wrong.... also he didn't give a timeframe and he has described a fall of around 1500$ which is happening in fact
I think next hour Bitcoin up to 11800
it's pretty obvious that Bitcoin traders are only interested in making the quick buck and we are probably having allot of amateur investors who make their buy/sell decisions based on news, rumours and speculation. There is nothing sustainable or foreseeable about this whole Bitcoin debacle rather than the fact that traders will buy it when they feel that the price is right for money be made and will sell it either to secure a profit or minimise a loss. Bitcoin is a tradeable asset lacking all the necessary qualities of a stock and the essential attributes of a currency and that's what makes it so volatile. We will perhaps see the 8k-20k trend moving up and down for a while now, perhaps even years, until this piece of code finally crashes, becomes obsolete and fades into the software landfill of history
Nice comment
I don't like the technical analysis, it seems that this analyst wants to do some magic.. I think that may be will have a little drop but then it will continue going up, the cup is done, we have to wait for a correction and if this doesn' drop to downto 8173.80 it has a huge possibility to continue its uptrend.. Next resistance is in 11820.00
Yes
I completely agree and it seems like the analysis its following perfectly fibonacci numbers! It won't fall ever, even Swiss declared to embrace bitcoin, where is this guy taking his news?? Need to be fired!!!!
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