What a great week it was for Bitcoin! After a tentative rally from it’s low at the end of last month, followed by some sideways meandering, last weeks price action showed that the Bitcoin Bull still has some bite!
Last week’s analysis highlighted a potential inverse head & shoulders setup with resistance (shaded red) around the 6800 mark. To the delight of Bitcoin bulls, the price smashed through the 6800 resistance to rally approximately 13% to the target price at current levels.
In a bear market, a trader must look to sell the rallies. In a bull market, a trader must look to buy the dips. This completed head & shoulders provides a solid base for what will potentially be the next bull market. As such, we can now view the market with a bullish bias and look to buy with a fair degree of confidence when the market pulls back.
Even more good news for the bulls – we are now looking at an even bigger inverse head & shoulders setup with a neckline at about $7750 USD which itself is a significant resistance zone (shaded pink). Should the price break this resistance zone the target price is just short of $10000 USD which coincides with the next significant resistance zone (shaded orange).
But wait – piling into Bitcoin right now is not necessarily the best move. We are yet to break through a significant resistance level (shaded pink) as well as not just one, but two important, long-term resistance trend-lines (blue lines). Furthermore, on the 4-hour chart there is bearish RSI and OBV divergence (full explanation). As such, if you are wanting to buy (particularly if one is a long-term investor), I would suggest phasing a capital amount into the market rather than buying all at once.
It would appear that the “Bull is Back”, but there can always be a “twist in the tail”. Pick your entries intelligently and make use of stop losses when using leverage or taking large positions.
Look to minimize losses from a potential short-term pull back now because if the price can hold above $6800 USD and then break strongly above $7750 USD, I expect that there will be further opportunities for profitable long trades up to 10000 and maybe even beyond!