UPDATE 06/02/2018: Bitcoin breakdown in the morning through the up-trend line, but afterwards prices are staring to rebound as the cryptocurrency hit a low at $5900, nearby the first important support we drawn on the daily chart.
People who invested in Bitcoin in December are probably living one of their worst nightmare. In 2017 Bitcoin, along with other cryptocurrencies, had an impressive rally that has been matched only by few stocks. With a return over 1000 percent on one year basis, the crypto market reached its euphoria phase in the last quarter of 2017, when Bitcoin quickly rose from $3500 to $20000 in only 3 months.
At that time was nearly impossible to predict Bitcoin’s peak or direction, with analysts and brokers often divided between pessimists – with many alarming that Bitcoin is a bubble – and optimists – some of them said Bitcoin could reach $100.000. Many financial experts started to mark Bitcoin as a bubble in early 2017, when the most famous cryptocurrency was just about to broke $1000 psychological resistance.
Those pessimists have continued to alarm the crypto market during the whole 2017, helping to fuel a crying wolf situation, in which people ignored any kind of warning, even when prices were about to reach the all time peak. We at The Business Globalist released a technical analysis on early January, in which we pointed out that a big upper shadow on December’s candle was a clear sign the bullish was exhausted, and we experienced the rage of Bitcoin supporters.
And while many people are now experiencing with their own money that nothing goes up forever in the financial market, included cryptocurrencies, many are now trying to understand if the market will fall deeper or if it’s now a good buy opportunity. We’ll give some indications based on a technically analysis.
BITCOIN IS TESTING A KEY SUPPORT: REBOUND OR BREAKDOWN?
If we take a look at the weekly chart above, we can see Bitcoin is testing the long-term up-trend line. This is a critical level, and if prices will breakdown this support then we will see the cryptocurrency drop more in the next days, towards the next two supports: the first at $5500 and the second at $3500.
The long-term up-trend line’s test could be a good opportunity to enter in the market in a long-term prospective, as long as we adjust the stop loss below this important support (if Bitcoin rebound the gain could be significant, otherwise if it drops we will not lose too much).
In case of rebound prices will came back in the area $10000-$11000, before going to test the lower trend-line drawn from all time high peak. In this scenario we expect Bitcoin to move sideways, as buyers and sellers will continue to fight each other in that area, until the market will give a new direction.
We remind to our readers that Bitcoin, as well as any other altcoins, is a risky investment and is very volatile, and moreover is in the middle of a huge correction, which maybe is not over yet. Trade with extreme caution.