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BTC Jumps Amid High Trading Volumes, Pulls Back Slightly

In our last analysis, we told you about an imminent inverse head-and-shoulders pattern, that would be completed, provided the price of BTC managed to hold above the $6k mark. That pattern would signal a short-term bearish-to-bullish reversal.

This past Tuesday, the said pattern was indeed completed and it was followed by a rather spectacular price-explosion, that took the value of one bitcoin well north of the $7k mark again. Where to now though? What happens next?

Following the above said sudden uptick (the price of the leading crypto rose by more than $600 in 30 minutes at one point), many expected a small pullback, which did indeed come and went too.

At one point, at the height of this mini-rally, bitcoin was trading for $7,562. Its pullback saw it drop to around $7,320, after which it regained its footings, rebounding to $7,432 right now.

Are we going to see further upward motion though, and possibly an attack on the $8k level? Given several factors that underpinned this latest mini-rally, such a turn of events is indeed a distinct possibility.

What exactly are we talking about though? Trading volumes. The massive spike was accompanied by an even more spectacular uptick in trading volumes (around 100% to be exact) and that is always considered to be a sign that not only will the gains hold, the asset-price may indeed continue gaining new ground.

On Monday, the trading volumes were hovering around the $2.9 billion mark, a low not seen since November 7, 2017. By contrast, as BTC broke out, the 24h trading volume shot up to $5.9 billion.

The significance of this trading volume-increase may signal a much more fundamental bullish turn-around though: as the price dropped lower and lower over the last 6 months, so did the trading volumes probe ever deeper levels.

Trading volumes are not the only indicator pointing to a likely short/long term bullish reversal though. The completion of the above said inverse head-and-shoulders pattern has opened the way to around $7.9k for starters.

This is the breakout target, and it is certainly in the crosshairs, or rather: it will be, as soon as the bulls finish booking their profits.

With BTC now once again moving towards $7.5k, this minor correction may indeed be over, and thus we may soon see $8,000 in the rearview mirror too.

Although the pullback occurred under the resistance level defined by the 100-day MA, the price broke above the 50-day MA, gaining acceptance there. That means: the bullish bias remains.

BTC Chart 2018-07-19

The majority of technical indicators are pointing to Buy as well. While the Oscillators paint a Neutral picture, the Moving Averages are Buy-biased, 9 of them to be exact. 5 still point to Sell, while one can’t make up its mind.

What about the fundamentals though?

Interestingly, Tuesday’s massive breakout and the consolidation that followed it, were accompanied by a flood of FUD, news-wise. Apparently, certain lawmakers (and their corporate sponsors) are more and more irked by this new technology that just won’t fade away and that is slowly but surely emerging as a threat for certain interests.

Congressman Brad Sherman of California – his main donor credit card processor Allied Wallet – has never been a fan of cryptocurrencies. Recently though, he saw it fit to propose a blanket ban on cryptocurrency mining and buying in the US, calling the asset-class a perfect vehicle for money laundering and tax evasion.

The Chairman of the US Federal Reserved got in on the FUD offensive as well, pulling out the time-honored and proven issue of money laundering, while calling cryptos “not really currencies”. Jerome Powell’s statements came hours before a Financial Services Committee hearing, centered on cryptos.

Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.


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