Bitcoin Weekly Update #11
By 4C Trading — 25/11/2019 :
This analysis is intended for swing traders or medium-term investors. As a reminder, swing trading is a strategy of speculation in financial markets where an asset is held only for a few days to take advantage of price fluctuations. In this analysis, which you will find every week, I will detail my vision of the market and more specifically the one of Bitcoin. In addition to a technical analysis, I will summarize 3/4 of the news that impacted the market.
A classic week?
Remember, a week ago I presented my Bitcoin analysis :
“In the event that the current zone does not hold and the 8500$ is broken with a high volume, the bullish bias will no longer be valid and the Bitcoin will look for its support zones around 7900$/8000$.”
Well, to say the least, the movement was much more violent than expected.
In the previous analysis, I also mentioned the possibility of facing a descending narrowing wedge : a bullish configuration. The moment its support was broken, my original bearish bias was confirmed and I launched a “short” position. Note that having established the market trend, we were able to look for “short” trades and these were more than profitable. A tip, when you put your profit taking (T1/T2/T3), always remember to leave a very small part of your position open. In case of strong movement, you can continue to accumulate profit!
The question that everyone is asking themselves: “How do you explain such a movement?”
The answer is classic: “China FUD” = the doubt that China is creating on the cryptomarket. This time by reaffirming its commitment to repress the cryptocurrency trading. For the curious, I invite you to read this article.
Why a classic answer? Because since the beginning of time, China has been playing this game of creating fear through false news that sounded “extreme”. See: “China bans Bitcoin”. What does that mean? A decrease in the price of Bitcoin, which generally impacts the entire cryptomarket, since most Altcoins are indexed to Bitcoin. As a result, the market drops quickly, people panic, sell their positions and with the snowball effect we end up with a nice -20% in a week. This is visible on a sentiment graph, such as the Fear and Greed Index. For novices, please read this article which summarizes everything you need to know about this indicator.
As you can see from the picture below, the index shows us that the general feeling is one of fear.
As a reminder:
- Extreme fear is a buying opportunity.
- Too much greed on the part of investors represents a sales opportunity, as a market correction is expected.
Thus, I will look for an ideal rebound zone rather than looking to short the current market. A decrease is still quite possible but the Risk/Reward of going into a short looks less profitable than the one for a potential long. In addition, if we look at the chart of Bitcoin futures contracts CME, we will see that there is a gap to fill around $11200.
When to go long?
For me, several factors will have to be confirmed:
- Currently the volume has been decreasing in recent months, so a net increase in volume would be required.
- A bullish crossing on the MACD in weekly.
- A Fear and Greed Index that stays low, or even goes even lower.
From a technical point of view, the ideal area for a real rebound would be between $5,000–5,600. Why this area? First, it is an untested liquidity zone (Price Action). Secondly, if we make a projection (white dotted line) of the weekly 200 MA (green dotted line) it coincides with a support area. As a reminder, we encountered this curve twice in December 2018 and February 2019. It can therefore be considered as an important support.
Note : this week analysis is targeting long term investors.
I hope you enjoyed this analysis and wish you an excellent week.
Graphic :
News :
- BRICS planning to launch Crypto for payment settlements : BRICS (Brazil, Russia, India, China, and South Africa) is considering to develop a cryptocurrency to create a single payment system within the countries. The real goal is to reduce their dependability on the US dollar for international transactions.
- Coinbase Custody allows customers to stake Tezos crypto : According to the latest tweet, Coinbase is now extending their service to global customers. The extension will allow customers from around the world to access to Tezos staking on Coinbase.
- Bakkt to launch new Bitcoin cash-settled futures : ICE recently announced that the exchange will soon launch a new BTC cash-settled futures in Singapore. The new contract, Bakkt Bitcoin Cash Settled Monthly Futures Contract is expected to be listed on ICE Futures Singapore on December 9th and it will be regulated by the Monetary Authority of Singapore.
- Two new Bitcoin funds for the 1%: Galaxy Digital’s two new Bitcoin-based funds for accredited and institutional investors in the so-called “1%”, according to a report from Bloomberg. The Galaxy Bitcoin fund has a minimum investment of $25,000, and funds can only be withdrawn quarterly. Custody will be provided by Bakkt and Fidelity Digital Assets.
Nico, analyst at 4C-trading.
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