Upper trendline holding Bitcoin down while ‘Golden Cross’ approaches
It is amazing to witness such highly choreographed technical charts for Bitcoin, when it is basically a youngster as an investment vehicle. You almost want to grab a finance instructor from academia, one of those individuals that preaches about Random Walk Theory, and ask him to explain how BTC prices can form such elegantly guided price “walks”, when every step is supposed to be random?
Today’s chart is a perfect example of how the market intuitively reacts to technical guideposts that are strewn “randomly” before it:
Courtesy of Coindesk, this chart could easily be transposed into any forex or digital asset tutorial about lines of resistance and support. Bitcoin peaked back in late June and has been on a gradual decline ever since, often displaying bursts of activity, whether up or down, with volumes to match. Along the way, a number of converging triangles have been cast into the picture, but BTC has ignored them and moved unexpectedly.
We often hear the term “formidable resistance”, almost ad nauseam, but in this case, we have it in spades. It is the white trendline that connects the upper candlestick wicks from June until now. Analysts want to see a few “closes” above this line, but as the yellow arrows indicate, there have been no less than five recent rejections. Bitcoin has, however, managed to stay above its 200-day moving average, “formidable support”, if it were. Unfortunately, the “squeeze” is on. Something has got to give, and give this week.
We are soon to see a real-time test of recent theories proffered by the analyst community. One such notion has been that we are now six months before next year’s halving event for Bitcoin. Countless articles have contended that prices will begin their ascent in anticipation of that event sometime this month of November, preferably soon, but the actual “strike date” for this proposition is after three weeks into the month.
Many counter arguments have been made that say the anticipated rise in prices, unfortunately, is already baked into the price. In fact, it accounted for the strength of the rally from February through June, according to these folks. These analysts look at the recent surge and say there was no follow through volume, a sign of weakness and lack of conviction. If institutional players have been accumulating for months and miners are back to hoarding their rewards, why do we not see the evidence in trading volumes?
There is one bit of good news that was actually discovered by two different analysts. NewsBTC wrote about “CryptoBirb”, who noted that his chart could signal a veritable “life changing event”. Another fellow, “Unicorn1”, on TradingView, was also happy to present his view on an the same approaching “Golden Cross” on the weekly BTC chart for others to review on their own. Here is his version:
The “Golden Cross” will occur when the 50-week MA passes above the 100-week MA, ostensibly during the last week of November. How “life changing” could this event be? The last time this happened was in mid-2016. Bitcoin was $500 back then, and what was to follow in 2017 was majestic – a parabolic rocket blast up to nearly $20,000, a nice “40X” multiple, if you do the math.
If you do the math now, is a $375,000 valuation for one BTC really in the cards? We doubt that 2020 will provide such an explosive event, but it is fun to dream. And what about the trendline’s formidable resistance? Beauty is always in the eye of the beholder, and if you are willing to behold, it is not that difficult to draw a “Pennant and Pole” pattern from April forward to the present. The math in that case would yield a value of $20,000, and then it would be off to the races, or so this fairy tale dream goes.
For now – Enjoy the ride after you wait for a solid trend to form.