is for the sixth consecutive day in its longest winning streak since March 29, when it rose for eight consecutive days.
Crypto trader, il Capo Of Crypto tweeted last week that while the price of BTC was falling, a pattern of buying interest was picking apart the supply pockets. Il Capo predicted that when this entity stopped accumulating, the cryptocurrency would bounce, and it certainly did with 19%.
Layered Money author Nik Bhatia and Bitcoin Layer analyst Joe Consorti argue that “dormant supply spikes are springboards for upward price action.”
It is an argument favored by crypto traders that dormancy in the price of Bitcoin is equivalent to a bottom. They cite the examples of 2016 and 2020 when Bitcoin was quiet and when the price exploded.
I disagree with them and here’s why:
In 2016, Bitcoin’s bottom paved the way for a large symmetrical triangle, followed by a continued uptrend.
In 2020, BTC bottomed, from where it catapulted to its April 14, 2021, $64,374 all-time high.
In complete contrast to the previous two examples, which followed bottom, today BTC is after a top, and not just any top, but the biggest in its history – $ 35,000.
Moreover, the price finds resistance below the ascending channel, and bows before the more significant descending channel. Of note, the price has fallen below the 200 weekly moving average (WMA) for the second time since March 2020. This was the first time on record since September 11, 2017.
However, the weekly price closed slightly below the bar and bounced back the following week. Currently, Bitcoin is below the 200 WMA for the fifth consecutive week. The 50 WMA also fell below the 100 WMA, even in the midst of this rally.
When Bitcoin is down, I’ll be the first to say so. According to the principles of technical analysis, the digital currency is on a trajectory that is much lower, a path on which it has been since . The price is retesting the broken ascending channel, near the top of the descending channel, providing a potentially ideal entry, at least from a risk-reward perspective.
Remember, you must trade with a plan that includes your timing, budget and temperament. If you don’t know how to put one together, below is a generic example so you can practice learning about yourself. The principles of technical analysis are statistically based resumes. There is no way to know if these market statistics will follow. Therefore, before entering the trade, close your eyes and imagine that it is lost. If you can’t handle it, don’t enter the trade. The longer you trade consistently, the better your overall trading should become.
Trading strategies
Conservative traders must wait for a fresh low below June 8 and short a corrective rally demonstrating resistance.
Moderate traders will lack evidence of resistance at these levels.
Aggressive traders may be short now.
Trade Monster
- Entry: $22,300
- Stop Loss: $23,300
- Risk: $1,000
- Target: $19,300
- Reward: $3,000
- Risk: Reward ratio: 1:3
Disclaimer: The author does not currently own any of the securities mentioned in this article.
