BTC/USD Forecast: Bitcoin Continues to Defy Gravity

Christopher Lewis

If you want to be buying this market, you need value.

Bitcoin markets exploded to the upside again during the trading session on Monday, although in very thin trading. This does concern me a bit to be honest, even though I believe that this market in the long term will continue to go much higher. The market has made a huge push above the $28,000 level, but a simple glance at the chart can tell you that we are overbought by just about any metric you use. Yes, I recognize that some people can believe that Bitcoin is going to $1 million a unit, but you cannot get there overnight. The question now will become whether or not this was something real, or if it was simply due to a lack of volume.

Do not get me wrong, I do not believe that you can short Bitcoin anytime soon, but we are most certainly flirting with disaster at this point. I am a bit surprised that we chose to break above the $24,000 level right away without a pullback towards the $20,000 level. This is what I would be concerned about if I were buying Bitcoin at this time, because the $20,000 level almost certainly has to be retested at one point or another. The 50-day EMA is breaking above the $18,400 level, so it is likely that we could go looking towards the $20,000 level to test that 50-day EMA eventually. A market that is this parabolic is dangerous, to say the least.

All it is going to take is a bit of profit-taking by a large trader to cause a “knock on effect.” We have seen this before in the Bitcoin market, so it would not be a huge surprise. At this point, if you are not in this market right now and want to be, you need to wait for a pullback. At the very least, you would need to wait for the market pull back to the $24,000 level. Unfortunately, I fear that a lot of retail traders are simply jumping in with both feet and ignoring the massive amount of risk that could come into the market. If we see a sudden rush towards the US dollar, which is very possible at this point, that could also have a knock on effect over here as well. If you want to be buying this market, you need value.

BTC/USD chart

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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