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Bitcoin Weekly Update 01-19-2020

Updated: Feb 22

Bitcoin Regains Key $8,500 Level & 20 Week Moving Average


This week saw everything from the Vegeta memes getting pulled out to people calling for new lows. As I said last week, I switched firmly bullish when $7,700 was reclaimed and stated that gaining $8,500 was critical. Now that it has been reclaimed along with the 20 week moving average I continue to be bullish provided it's maintained; a close below on a weekly basis would invalidate that.


Bitcoin Weekly Chart

I continue to mark the same levels on the weekly chart, though now that we've claimed a key level I've added the next relevant on up around $9,500. One important theme in trading is to play things level to level; I switched bullish when $7,700 was reclaimed and sold some Bitcoin around $8,500 as that was the most notable immediate resistance in my eyes, now that it has been claimed I'm looking to buy again and eyeing up $9,500 as the logical level to take profits. Likewise, my bias will shift based on how price interacts with these levels - I was bullish as long as $7,700 held but bearish if lost, now I'm bullish as long as $8,500 holds but bearish if it's lost.


Hopefully that's clear and pretty straightforward. BTC broke out of the weekly downtrend, and regained the $8,500 resistance and the 20 week moving average and therefore I'm looking for longs targeting $9,500 or so; if Bitcoin closes a week below these levels I'll primarily be looking for swing shorts into the next logical level.


However, as always I'm considering both perspectives and there's certainly a valid bearish argument which I'll cover now.


Compare price action now to the price action in 2018 and notice the stark similarities. In May 2018 price rallied after a significant dump and eventually was rejected by the 20 week moving average (blue) and there was a death cross with the 20 week and 200 day moving averages as Bitcoin sold off to $6,000. BTC then rallied hard again, smashing through the perceived resistance of $6,800 and even regained the 20 week moving average. However, the move ultimately stalled in the golden pocket of the 0.618-0.65 fib retracement, displaying an exaggerated bearish div on RSI and never managed to regain the 200 day moving average. Price then dumped into daily support and looked poised to bounce before nuking that level on the next test and price sold off back into the $6,000's.


Fast forward to the end of 2019 and Bitcoin once again found itself dumping from $13,000 to the low $7,000's before rallying through the towards $10,000 where it was rejected by the 20 week moving average. Shortly after, there was again a 20 week and 200 day moving average death cross and price sold off to the $6,000's. Now we see Bitcoin rallying again, blowing through the perceived resistance at $7,800 before getting a swift rejection in the holden pocket of the 0.618-0.65 fib retracement and the 200 day moving average. Price has now pulled back to daily support and has been bought up so far but we again see an exaggerated bearish div on the RSI and Bitcoin has not reclaimed the 200 day moving average. Like I said, the similarities are striking.


So, is history doomed to repeat itself? Maybe, there's no way of knowing how the coming days and weeks play out, technical analysis is no crystal ball. $8,500 was a critical level for me, as was the 20 week moving average and therefore I'm looking for longs; after all, a sample size of one previous bearish scenario isn't enough to deter me from making logical plays. However, whether you give credence to fractals or to technical analysis, it's clear that if the daily and weekly level from $8,500-8,600 fail to hold I'll be favoring downside and switching back to the bear camp.


Ethereum Weekly Chart

Rather than post a bunch of altcoin charts, I'm going to stick with Ethereum since it's often strong indicator of the alt market as a whole. In the past week or so I increased alt exposure to a level it hadn't been at in a long time and I continue to maintain the majority of those positions, although cautiously. Why? Above we can see that Ethereum was rejected by the $189 weekly resistance and therefore I'm expecting a pullback both for ETH and the alt market. However, $153 was cleanly reclaimed and as long as that holds I'm likely to be a dip buyer rather than a panic seller. Lose that level and it's possible Ethereum and the alt market seek new lows.


Summary


$8,500-8,600 is key for Bitcoin. Bias is strongly bullish above, clearly bearish below. Alt market is likely a bit overextended at the moment and could see pullbacks, but as long as Bitcoin doesn't tank there's likely significant gains to be made on these pullbacks. If Ethereum loses $153 I think it could head to new lows and take the alt market with it but as always Bitcoin is king and it will dictate market direction for the entire cryptosphere.


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