Bitcoin ended up breaking lower during the trading session on Thursday, in a perfect selling opportunity based upon the shooting star from the Wednesday session that I had pointed out in yesterday’s video. Now that we are sitting on top of the 50 day EMA, there will be a little bit of support from a psychological standpoint but quite frankly the price action looks like it is simply a continuation of the overall downtrend. If that’s going to be the case, it’s probably only a matter of time before we break down below the 50 day EMA insert looking towards the 7000 handle again. That was just above the recent lows, and it is a large, round, psychologically significant figure. It tells me that the market is likely to respect that area, but I also believe that it is only a matter of time before we break down through there. The trend line has been respected during the Wednesday session and the follow-through on Thursday gives me more conviction to the downside.
For those of you that have been watching for a while, you know I have been calling for a move down to 4800 below, but that doesn’t mean that we are going to get there anytime soon. I think it’s going to be a longer-term grind lower and there will be the occasional bounce. Most of the bounce recently has been due to tensions in the Middle East, and people are looking to protect their trading capital, but as the tensions in the Middle East have drifted lower, so has Bitcoin. It is simply not the safety asset that it once was, and it probably was a bit of an overreaction to see this market rally.
That being said, if we were to break above the shooting star from the Wednesday session then I would have to change my outlook in the meantime, expecting a move towards the 10,000 level. I don’t think that happens though, so I continue to look at short-term rallies as opportunities to sell Bitcoin as it simply can’t pick itself up. The question that most traders will have to look at is what exactly Bitcoin is going to end up being? After all, it’s not money, it’s not digital gold, and it’s not very stable. Because of this it’s very likely that we are going to continue to struggle to hang on to gains for the longer-term.
