- Bitcoin initially rallied a bit during the trading session on Thursday but gave back those gains as we continue to look a little bit soft here.
- In fact, with a little bit of imagination, you could even suggest that we are in the midst of forming a head and shoulders pattern.
- It’s a sloppy one. It’s not necessarily one that I’m overly excited to take as a short trade, but it is something worth paying attention to.
That being said, I’m not shorting Bitcoin anytime soon. I think this is a situation where maybe we just got a little ahead of ourselves and now we have to work off that froth. In fact, that’s what I’ve been saying for a couple of weeks now as we have dropped lower by about $7,000. The 50 day EMA sits just above the $100,000 level and is rising and should at least in theory offer a little bit of support.
The $100,000 level itself should offer support also. If we were to break down below that level, then the $95,000 level could be your next target for buyers to come in and pick up cheap Bitcoin. Keep in mind, this is a Wall Street asset, so that it will keep it somewhat inflated anyway, because you can buy it via ETF.
It’s an ETF
Despite the lack of adoption in places like the United States, the reality is this is Wall Street’s new favorite toy. It will remain viable as long as BlackRock and others have their hands in it. So, I’ve pretty much given up on trying to short Bitcoin. I think it’s a really reckless thing to do in this environment. Despite any personal opinion on it, I just trade the charts as I see them.
What I see here is a market that gained 40 % in about a month and is giving some of it back. There’s absolutely nothing in this that’s abnormal. If I had bought Bitcoin three and a half, four weeks ago, nearly $80,000, I wouldn’t be worried about this in the slightest. And in fact, I might be looking for a drop and then a slight bounce to add to my position. This is definitely a one way trade. You just have to be patient.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.