A Bitcoin Selloff You Should Be Happy About
Bitcoin Moves Lower, Buyers Snatch Up Discount Coins
After posting a triple digit rally the inevitable happened. Bitcoin reached up, touched a key resistance level and unleashed a round of selling. The selling is a combination of profit-taking and lingering HODL’rs from 2017 and 2018 trying to get out while they can. The bad news is that the rally in Bitcoin is over, for now. The good news is that the move lower was met by significant buying and the outlook remains bullish.
A look at the hourly chart will show one of the biggest sell-offs in Bitcoin history just last night. This sell-off was sparked by a move $8,000 that touched the high of last July. The move wiped out more than 22% of Bitcoins value in just a matter of hours. Equally fast was the bounce back from support that has prices moving sideways and reconfirming support at a higher level. The new support is looking like $7000 which is a bullish sign. The $7,000 has been an important pivot point for the last few weeks.
A look at the daily chart is daunting. The BTC/USD has created a very strong bearish candle after touching resistance. The mitigating factors include evidence of strong support at the moving average and convergences in the indicators. Both MACD and stochastic set new highs alongside the new high in Bitcoin prices, an indication of market strength. The MACD peak is a multi-year extreme peak, a sign of market commitment and indicator of trend continuation. From that perspective we can expect to see BTC/USD at least retest the $8,000 level if not break on through to the other side.
The weekly chart is still bullish too. The candle and stochastic are showing signs of resistance within an uptrend and possibility of sideways movement. The MACD momentum is showing a steady increase in momentum that is likely to carry the coin up to retest $8,000 at least. A break above $8,000 would be very significant in the long-term perspective. The first target with reasonable assurance is $12,000 followed by $16,000 and then $20,000.
In the near term, traders should expect some consolidation. BTC may retest today’s lows, it will for sure move sideways within this new range for a day or two at least. A week or two, maybe even a month or two is more like it. the range is now $7,000 to $8,500. If one of the many catalysts on the horizon comes, say a BTC ETF or Bakkt goes live, you can expect to see BTC move sharply higher. Until then I expect to see a slow steady climb to $20,000 as we get closer to the halving.