Today, I offer you a technical update of the crypto market, still driven by Bitcoin. Although BTC’s dominance is decreasing at the market cap (BTC.D on TradingView), the market remains positively correlated to BTC: an increase in Bitcoin prices is followed by the entire market, and phases of declines are also followed. In my opinion, it, therefore, remains the best indicator of market price “forecasting”.
If we take a look at the weekly candles, sorry to say it, but the observation remains unchanged: two large wicks of rejection have taken place, as was the case at the end of 2017. After having seen its value increase by nearly 330 % in a few months, it would seem that the market has already entered a consolidation phase.
The high shadows, here in monthly, indicate a potential market reversal.
Now let’s take a closer look at the weekly candles this time.
I have added here the Bollinger bands in 50 periods, which are a very good indicator of price value. As you know if you are familiar with this technical indicator, buy/sell opportunities are often found when prices exit bands before reintegrating them.
Here, we quickly realize that the opportunities of the moment are more for sale than for purchase… especially after the recent bubble we made (yes, I am not afraid of words and speak well of the ‘’small bubble’’ of 2019).
For a long-term strategy, we are in areas where buyers who have bought lower should start to collect their profits, or even to leave their purchases to eventually seek sales.
This does not mean that prices will not go higher. I don’t know anything about that. All I know is that in the long term, we are in areas of sales or profit-taking. Purchases must be made as the supports approach, not weekly resistance!
If we look even closer and zoom in on the graphs, in 30 minutes, for example, we see the potential formation of range.
Reinvesting a part of the gain I have on my big shorts ($13,010), I shared with you yesterday on Tweeter my new short entry around $9,950, as we approach the retracement of 23.6% of the previous big downward movement, under resistance. The market did not respond and broke the resistance. So, I triggered my STOP and now aim for the next resistant zone, the $10,600 – $10,750 zone on which, upon confirmation of prices (reversal or exhaustion candle). I would most probably take a more substantial short. This area represents a 38.2% retracement of the entire previous decline, but also a 76.4% retracement of the range in which we are.
If prices go up to the gap, it is probably to close it (this gap in the future contract has already rejected prices twice, I don’t think it’ll reject a third time).
The bulls have been in control for 4 days now and the bears will probably try to defend the identified area by coming in short. We could also see some bulls cash-out their gains in this area, thus selling the market (selling their buying positions) which could contribute to a potential drop in prices.
If the market also ignores this area, continuing to rise, I would wait for more favorable and interesting selling areas to, eventually, try a short entry again (I remain bearish in the short term).