Hey there Uptrennd traders, Bitcoin has been pumping for the past two months of Oct/Nov 2020 in a historic "uptrennd" toward its highest price value in history, but has stopped just short of breaking its own world record – for now. Technical indicators suggest this week may be a time of retracement or dip in price. Or is it just a minor breather in the parabolic climb that is about to smash beyond the $19700 all time high?
If we look purely at the technical analysis of Bitcoin price action, we can see that bitcoin is in its major bullish trend this year, since the halving of May 2020. Price really took off though in a parabolic rise that looked like a rocket to the moon, starting in early October, when it left the 100 day Moving Average (MA) which had been acting as support for the entire month of September.
Since that early October lift-off, the bitcoin price steadily climbed, with the 10 day MA always acting as support. Not once did price close below the 10 day MA – until today. This is the first clear indicator that Bitcoin price may be stalling. Curiously we have almost achieved the stratospheric and historic all time high in bitcoin price, last seen in mid December 2017.
That was the highest price bitcoin ever achieved. I remember it well, as I had just discovered bitcoin and bought my first satoshis in November 2017. I never realized that I was buying the top back then of course. Well, we are back at that all time high (ATH) for the first time in three full years. It has been a long wait for me and all the long term HODLERS, but it has been worth it.
I have learned a lot about TA since then, and have been accumulating bitcoin throughout. Now we are all in profit and awaiting the new all time high prices to manifest. But price has stalled at the ATH resistance. And this is a natural place for price to pause, and even retrace after the past two months of solid uptrend.
Beside price finally breaking below the 10 day MA and bouncing perfectly off the 20 day MA, the daily RSI has also finally broken below the overbought 70 mark, for the first time since 20 October. These two indicators – the break below the 10 day MA, and the RSI overbought range – clearly tell me that the current bullish momentum is dying out. Price will never go directly up or down. It moves in a series op ups and downs. The up has been so strong and prolonged over the past two full months – unlike I have seen much in bitcoin history – that the resulting dip or retracement now could be a strong one to the downside.
This is just a possibility though, for in a bull run, as we have this year – and all of next year – bitcoin price may act much more powerfully to the upside than usual, as we have just witnessed for two months. So no one can say for sure just how volatile bitcoin price will be or how it will act.
Let’s remember that this time around the bull run is not driven by retail investors, like you and I, finding out about bitcoin and buying in. This time it is driven by big institutional investors with millions of dollars each, buying up all the newly mined bitcoin available. Massive corporations like PayPal and Square (Twitter) as well as investment institutions are buying this time, as bitcoin goes mainstream. So the buying pressure could actually be stronger this time than it was in the 2017 bull market phase.
As a result bitcoin price could do unprecedented things, and climb with greater momentum that ever seen before. We simply cannot predict based purely on past behavior. The cycles are predictable, based on the math written into the bitcoin code by Satoshi Nakamoto, but the conditions are different each time.
The bitcoin world is now watching and waiting with baited breath, to see if bitcoin will attain new ATHs this week or in coming days. We are at the cusp of what looks like a volcanic eruption that’s bubbling under and about to explode like never before. History is about to be made. It’s just a question of when. It could be today, or next month for all we know.
So we really need to watch closely. The 11% drop in price over the past two days, after hitting resistance at the ATH, is significant, and suggests to me that further downside is possible. Ideally the support of the 20 day MA will hold and price will climb, but realistically price could still fall to the 50 day MA around $14500, or the 100 day MA, which lines up well at present with previous price highs around $12500, seen in August. These are just my personal opinions and not investment advice.
Trading & TA
Trading & Technical Analysis