Is The Bitcoin Rally Already Over Not Even Close

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Is The Bitcoin Rally Already Over? Not Even Close

A Function Of Healthy Market Mechanics

After surging more than 40% over the last two months Bitcoin prices are falling back. The move has now reached the -11% level and threatens to take BTC prices even lower. The good news is that lower prices are not likely, not right now. A look at the charts should be all it takes to get new bulls interested. The market, Bitcoin and the other major cryptocurrencies, is pulling back but to a support level consistent with a text-book buying opportunity.

That’s what I love about the cryptocurrency markets. Aside from supply and the cost of mining there really aren’t any fundamentals to drive the value. The market moves almost entirely on technical signals so, if you are patient enough to wait, clear signals always emerge. The problem for most, and I include myself in that because I can fall prey to the issue, is the cryptocurrency market is very long-term oriented. It can take a long time for those signals to play out.

Litecoin Is Leading The Market

Litecoin got a bit of news a few weeks ago when its mining level hit a new two-year low. While concerning, it is not surprising given the passage of LTC’s halveing-driven rally and a similar yet upcoming event for Bitcoin. In the time LTC’s hashrate hit a new low BTC’s hashrate has been moving up to new highs, go figure. Most recently, the LTC hashrate has been forming a bottom so there is some hope the mining community is still solid.

Regarding the rally, LTC/USD moved up more than 75% between December and January and is now in correction. Correction does not mean reversal even though this one has hit 20%. The 20% level usually indicates a bear market, it does not always indicate a major market reversal, and moves of this type aren’t that uncommon on crypto charts. More telling, the correction is finding support at the short-term 30-day EMA where the next rally is likely to form. The indicators are still bearish so I would expected support to be tested, if it is broken price action may move down to $48.

Bitcoin Set Up To Rally Once More, How High Can It Go

The Bitcoin chart is a near-replica of Litecoin’s. After moving up more than 40% the world’s most-important cryptocurrency has entered correction, fallen -11%, and finding support at the short-term EMA. The indicators are bearish suggesting some near-term weakness so caution is still warranted. Assuming a rally is about to form, the indicators are set up to fire a strong trend-following buy signal when prices begin moving up.

The Bitcoin Price Dump Is Not Even Close To Over: Report

The bitcoin price dump doesn’t seem to have an end since the price of the number one cryptocurrency suffered a huge setback in August 28 th and crashed the support line of below $10,000 as we read in the altcoin news reports.

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The bitcoin price dump was expected and many analysts warned that this will actually happen and unfortunately for the bulls, the technical analysis shows that the pain is not over yet. The bitcoin price rally has been losing its steam since it reached a new peak at $13,880 on June 26 th and bulls tried to keep the momentum alive but the attempts to rally the troops were met by the heavy selling actions. By looking at the daily charts, it seems like the cryptocurrency has generated three lower highs and each high was painted after bouncing back from the support at $9,600. The price action formed a formation of a bearish descending triangle. The uptrend support that led the market to the $13,880 was later converted into resistance and this points to the growing strength of the bears.

The owner of Wyckoff Stock Market Institute, Todd Butterfield shared his views on bitcoin and stated:

“On June 26th our Proprietary Technometer indicator warned of an overbought market and one that was needing a correction. That day, we experienced a Buying Climax (BC) on heavy volume, and then an Automatic Reaction (AR) the following week, and then a rally for a Secondary Test (ST). The Secondary Test came on lower volume when compared to the Buying Climax, which said the high of the Buying Climax would stand as resistance.”

In other words, the experts from the institute expressed the views that the bitcoin cryptocurrency is likely to correct in the future and in addition Butterfield stated:

“Since our Technometer is at a reading of 41.82, we have no reason to believe the selling is over, as we are wanting a reading of 38 or below which would tell us the selling has possibly run its course. So we expect a break of the $9,150 area where we will be preparing buy orders. We expect all-time highs shortly thereafter.”

As we can read in the latest cryptocurrency news, Butterfield has already placed hits bets on Bitcoin and it seems like the leading cryptocurrency will slide again before resuming the uptrend.

Bitcoin rally over?

The price of Bitcoin has skyrocketed about 50% so far this month to a high of $8390, following a 28% rally the month before. The crypto currency has surged past its 200-day moving average, all the way down at around $4440. In other words, BTC/USD would have to half from here to get back to this long-term moving average. The distance between it and this moving average makes it susceptible for a drop, as prices do tend to revert to the mean from time to time. In fact, Bitcoin is looking extremely ‘overbought’ in the short-term. So, for the sake of healthy price action, Bitcoin will either need to correct itself or, ideally for the bulls, consolidate for a while before it makes further gains. Indeed, the Relative Strength Index (RSI) is already at extremely overbought levels around 80. In fact, Bitcoin was in the process of potentially forming a bearish outside bar candle on its daily chart, so this phase of the uptrend could come to an end. But zooming out, it is worth pointing out that Bitcoin has not even retraced to its shallow Fibonacci level of 38.2% at $9440 against its record high. So, this year’s rally is certainly impressive but it does not necessarily mean the long-term bear trend has ended.

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

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