Trading Bitcoin: The Waterfall Continues

Trading Bitcoin: The Waterfall Continues

The waterfall continues as Bitcoin falls 14% in the last two days. Currently, Bitcoin is trading at $10.5k after topping on its parabolic run from the start of May. Now, the technicals are looking very bearish for Bitcoin’s short-term future and the 30-40% pullback we’ve been expecting may be here. On the daily chart above, Bitcoin’s sequential indicator is on a red 2 of 9 candle. Therefore, sequential is telling us that price action will be bearish for the next few days. Just as a green 2 closing above a green 1 is bullish, a red 2 closing above a red 1 is bearish. Additionally, there is a large support cluster forming at roughly $9.4k. This level aligns with the 0.382 fibonacci level, the sequential setup trend line (green dotted), and the 50MA (gray). As of now, $9.4k is the strongest area of support for the bulls.

4 Hour

The 4 hour chart above is currently in a bearish posture after finishing a red 9 sequence. Most notably, Bitcoin has closed below the 50MA (gray) which will now act as resistance.

Weekly

After topping near $14k, Bitcoin has created a bearish candle after closing yesterday. This kind of reversal candle is characteristic of a trend exhaustion. Also, the 50MA (gray) has recently crossed below the 128MA (green) which can sometimes indicate the beginning of a pullback or downtrend.

NVT Indicator

Since 2011, the NVT indicator has had a perfect record when calling overbought and oversold conditions in Bitcoin. We’ve been in overbought conditions since April and have remained above the critical 150 resistance level. Yesterday, Bitcoin’s NVT indicator dropped to 158 and is nearing 150. If the NVT indicator falls below the critical support level at 150, expect a pullback to at least $8.5k. For now, the NVT continues to hold support above 150.

Cryptocurrency News

Chainlink has been the best performing cryptoasset throughout Bitcoin’s May uptrend. Recently, Chainlink was added to Coinbase Pro and Coinbase retail.

Image source: https://cryptoslate.com/chainlink-skyrockets-117-2-percent-listings-coinbase-pro-retail/

Above is a chart of Chainlink before and after it was listed on Coinbase and Coinbase Pro. While the Coinbase effect has been less prevalent throughout the last year, Chainlink has been a prime example of Coinbase’s influence over the market. After Chainlink was listed, the asset increased as much as 117%.

Conclusion

Bitcoin has topped at $14k and a further pullback is probably coming. The strongest area of support for the bulls remains at $9.4k with resistance at $11k. If $9.4k is purged, look for a retest of $8.5k.