Trading Bitcoin: Bulls Gather at $8.1k

Bulls Gather at $8.1k

The bulls gather at $8.1k after bouncing from $7.8k yesterday. In yesterday’s article we noted,

“When price gives you a green 2 going above a green 1 on the daily chart, it’s an indication to go long (at least in the short-term). If Bitcoin gives us a green 2 tomorrow which also goes above the current consolidation level at $8,050, then a long trade is in play. However, the bulls are still facing harsh resistance at $8.3k, $8.8k, and $9k.”

Today, price has given us a green 2 going above a green 1 on the daily sequential indicator. Therefore, if price closes above $8,050 today, a long trade is in play.

Cryptocurrency News

Is the cryptocurrency market correlated with other asset classes? According to researchers at Indexica, the answer is no. After extensive research, Indexica determined that Bitcoin and cryptocurrencies do not react to news in the same way traditional markets have behaved for decades. This isn’t a huge surprise considering Bitcoin is only a decade old. Stocks, bonds, ETFs and other securities have earnings reports, news updates, and an established form of price discovery. One possible reason is due to the amount of young people buying cryptocurrency as their first investment. Additionally, Bitcoin and the cryptocurrency market is still in an infantile stage of price discovery. After all, when volumes skyrocket and volatility increases, Bitcoin exchanges sometimes have $500 differences in the price of Bitcoin across various exchanges. This allows high frequency trading firms to have excellent arbitrage opportunities. Above all, it will likely take years before the SEC gets a handle on Bitcoin’s price discovery. Therefore, the correlation between cryptocurrencies and traditional markets is still yet to be seen.

That being said, classical technical analysis has been very accurate in determining psychological barriers as well as sentiment and trend. Momentum indicators have also been extremely useful in determining the direction of macro trends.

Conclusion

Bulls gather at $8.1k: Not much has changed since yesterday. The technicals are bullish in the short term. A green 2 going above a green 1 is a signal to take a long trade. Expect heavy resistance around $8.3k, $8.8k, & $9k. On the weekly macro trend above, Bitcoin is still in a red 1 to 4 week correction. Therefore, sequential is telling us there are 3.5 more weeks of sideways or downward price action on a weekly time frame.

Disclaimer: The author of the article owns Bitcoin