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Last week we commented in our article “Has Bitcoin Found a Bottom” that BTC had been under significant sell pressure due to the infamous Mt. Gox liquidations and recently the German government selling thousands of coins. That selling has ended, and BTC reacted violently to the upside, smashing through the resistance we spoke about at $59,845. That resistance should now act as support.
We also commented that multiple indicators suggested that BTC could have found a temporary bottom, but that until it started pushing back through the major resistance levels, we could see a test of the $51,000 to $52,000 area. That re-test never came, so our bids would not have been hit.
You can see from the chart above that we indicated the areas of support and resistance clearly. We also highlighted demand building in the oscillators. We use a proprietary, third-party indicator set called Market Cipher to identify these areas of demand before the market turns. (We will soon be offering specific trading ideas through our paid services… stay tuned!)
So, what to do now? If this rally is for real, which it looks like it could be, we’d expect the resistance to flip to support. It’s likely this rally cools and pulls back a bit. We have a huge CME gap from the weekend at $57,900. These are often back-filled. We’d place entry bids at previous resistance levels starting at the gap at $57,900, then at previous support at $59,845 on up to $60,500 for BTC.
In regard to alt coins, the rally hasn’t been as dramatic because BTC has a tendency to suck all the oxygen out of the room when it rips. We’d expect that alts will play catchup as soon as BTC takes a breather. If you’re not exposed to alt coins yet, this will likely turn out to be a very good entry point in retrospect. Check out our past article “Is it Time to Buy AI Crypto Again?” for some ideas on alt coins focused on AI, which is poised to be one of the strongest sectors in crypto.
As always, trade safe and use sound money management with your positions.