BTC/USD
Bitcoin did very little during the session on Friday, as it has essentially flattened out. The market continues to hang below the $4000 handle, and perhaps even more importantly: the downtrend line that I have marked on the chart. I think that the bitcoin markets continue to struggle due to a lack of interest, and I believe that it is only a matter of time before the sellers come back in. However, there are is always the alternate scenario that you should pay attention to.
The bitcoin markets continue to struggle with the idea of $4000, and the fact that we have simply slid sideways with a small downward bias tells me that the market believes that bitcoin should be lower in price. We are in a downtrend, so at the very least that something that you should be paying attention to. I believe that fading rallies continues to work, but if we do get a daily close above the downtrend line, we could have a move of a couple of hundred dollars just waiting to happen. I believe that the $5000 level will be extraordinarily resistive as well, so somewhere between a break out in there I would be looking for signs of exhaustion and would not hesitate to start selling again.
I believe that the market is probably more likely to continue to slide lower, perhaps reaching down to the $3000 level underneath, to test it for stability. It is very rare that we test a price just once, and with the bitcoin market getting slaughtered the way it has during most of the last 12 months, traitors probably need to be convinced about support. I believe a lot of psychological damage was done when we broke through the $6000 level, because that had held up so well. With that in mind, I think it’s good to take even more convincing to get people to buy at the $3000 level.
