The Bitcoin Party May Soon End
For the umpteenth time in a few weeks, Bitcoin (BTC) bulls have managed to wrestle bears out of the ring. The asset has moved back up to $8,150, and looks poised to head higher.
But as Josh Olszewicz of Brave New Coin recently pointed out, an indicator may be signaling that Bitcoin is poised for a pullback. In a recent tweet, Olszewicz pointed out that the Kijun band of the Ichimoku Cloud, a series of technical indicators coagulated to determine trends, key levels, and reversal levels, is now 30% away from price levels. The last time such a delta was seen, BTC spiked. The thing is, that’s when the price was 30% under the Kijun band.
So if history is of any indication and if the analysis of the Cloud works for overbought and oversold assets, BTC could soon shoot lower, falling closer to the Kijun band. But, there might be some hope, as 2017 saw Bitcoin trade over 30% above its Kijun band for weeks on end, giving BTC the chance to run further from here before a potential drawdown.
Although a pullback seems inbound, such a move would present a solid buying opportunity — may be one of the greatest in this market cycle. Josh Rager, an advisor/team member of crypto exchange upstart Level, recently pointed out that there are high rewards for buying the bottom of pullbacks. Rager notes that when BTC experiences a 30% drawdown in a decidedly ongoing uptrend, buying opportunities are rife.
In fact, the last time 30% pullbacks were seen, you could buy BTC at the bottom and sell it weeks/months later for often over 100% profit. The thing is, assets cannot go parabolically higher forever.
Rager’s recent comment comes after he pointed out on Twitter that Bitcoin’s current three-day chart structure is almost identical to one seen in BTC, which saw the asset break out of accumulation, peak, then drawdown prior to a next long-term bull run, which brought BTC from a $200 low to a $20,000 peak.
Even still, there’s a chance that a correction might not even come to fruition. Rager on Friday noted that a so-called “meme triangle” formation on Bitcoin’s six-hour chart has continued to hold, almost to a tee. With Bitcoin seemingly keeping up the bullish momentum, there’s a growing likelihood that BTC will close a key candle above $8,200. This, in the eyes of the analyst, could set the stage for a surge to $9,000 and beyond, where there sits the crypto market’s next key horizontal resistance.
But after that, who knows where the leading cryptocurrency will head next? At this point, we just need to wait and see. Optimists
Title Image Courtesy of Marco Verch Via Flickr