Bitcoin long-term trend still looks bullish, short-term not so much
Bitcoin’s exponential growth lead 40-year trading veteran Peter Brandt to (famously) believe BTC entered a new “parabolic phase.” From its December low of $3,150 BTC could aim for a new high of $100,000, Brandt suggested. However, in the short-term, the technicals do not look so rosey.
Bitcoin takes aim at $100,000 target. $btcusd is experiencing its fourth parabolic phase dating back to 2010. No other market in my 45 years of trading has gone parabolic on a log chart in this manner. Bitcoin is a market like no other. pic.twitter.com/wE4j3riMgI
— Peter Brandt (@PeterLBrandt) June 22, 2019
The “parabolic advance” has been so significant that most of the technical bearish signs seen on different timeframes have been invalidated allowing the uptrend to continue, even getting the former notoriously stubborn bear, JP Morgan Chase VP Tone Vays, to become officially bullish.
Trading #Bitcoin – My 15 Years of TA experience tells me that you need 3 steps for Trend Change. Establish a Swing High, Followed by a 30%+ Correction (based on $BTC's volatility hist) than challenge set high. So here we are:https://t.co/XL4fQnnxj5
— Tone Vays [#UnderstandBit] (@ToneVays) July 10, 2019
Despite the outgrowing positive sentiment that can be perceived in the market and the short-lived pullbacks, there are still some patterns hinting that Bitcoin could be due for more major corrections.
Bitcoin technical analysis
In the long-term, everything seems to point out that the bull market has started and Bitcoin is on its way to new all-time highs, as Peter Brandt explained.
The moving average convergence divergence (MACD) that, which is commonly used to follow the path of a trend and calculate its momentum, recently had a bullish cross between the 12-month exponential moving average and the 26-month exponential moving average, which is a strong positive signal.
Such a formation has only occurred twice on the 1-month chart since Bitcoin was released. The first time happened around June 2010, which took BTC through a 22.6x upswing from $5 to $214, and the second one developed in December 2015 and saw it surge 5.6x percent from $350 to $19,770.
The Parabolic SAR, which is displayed as a series of dots that helps identify potential reversals in the price movement of an asset to determine the direction of the trend, also gave a bullish signal—positioning itself below the price of BTC last month. The last time the Parabolic SAR signaled a trend change from bearish to bullish was in June 2016 and was followed by a 3,700 percent rally that ended in the all-time high of December 2017.
Along the same lines, the TD Sequential Indicator is currently on a green five candlestick suggesting that BTC has the potential to continue going up for another four months before a sell signal is given in the form of a green nine candlestick.
As the upward movement continues to unfold, it seems like nothing can stop it, just like it can be seen on the 1-week chart. All the bearish signs that have developed, after Bitcoin moved above the 7-week moving average in early February, have been neglected due to the increasing buying pressure behind BTC.
The first sell signal given by the TD Sequential Indicator as a green nine in the first week of April, for instance, was followed by a three weeks consolidation period that ended up in a 70 percent breakout. The other one beginning in June was invalided by a bullish engulfing candlestick pattern, when the following green candle completely overtook the body of the previous red candle, resulting in another 55 percent rise.
In addition, the long upper shadow candlestick pattern that formed two weeks ago was refuted by the 7-week moving average that acted as strong support rejecting the forecasted correction and bouncing off Bitcoin’s market valuation from around $9,600 to more than $13,000.
Not only has Bitcoin undermined these bearish signals, but now a golden cross between the 30 and 50-week moving average is forming adding more credibility to the long-term bullish outlook. This is a pattern that is seen by many investors as one of the most definitive and strong buy signals that predicts an upward breakout.
Since Bitcoin’s bull trend seems very strong, Josh Rager, a cryptocurrency analyst, pointed out that that double top patterns that were able to take BTC to lower lows everytime they developed during the 2018 bear market could now be indicative of exhaustion points. Rager believes that there is a double top formation currently developing that has the potential to create a short-lived correction, but will not affect the overall direction of the trend.
It's likely that fear of a "double top" may be shared by some if price pushes above $13k again
Double tops were a popular reversal pattern in 2018 where price created a double high or near high before the next drop
The big difference though…
2019 is a bull market pic.twitter.com/2ozUjAdCD4
— Josh Rager