Yesterday we were out with a VERY bold call on cryptocurrency prices, that you SHOULD BE EXTREMELY CAUTIOUS with bitcoin at 11,000. We predicted that the price of bitcoin would fall under $10,000.
Those calls came to fruition. We are set for a roller coaster ride for the price of bitcoin, so buckle up.
Today we are out with a new watch, and are looking for bitcoin to hit 9,000 today.
Beware parabolic moves in the price of bitcoin!
If our prediction comes to fruition again, bitcoin could suffer a deeper pullback over the weekend, the price charts indicate:
Notably, it’s only been a day since the cryptocurrency clocked an all-time high of $11,363.99, before falling more than 15 percent to $9,300.
In the Asian hours, bitcoin regained some poise, moving to a high of $10,681 today, before starting to drop again at around 05:00. The cryptocurrency was last seen trading at around $9,451.
The decline to below $10,000 comes despite news that Nasdaq plans to launch bitcoin futures in 2018, perhaps indicating that bitcoin’s coming move towards the investment mainstream has been priced in by the markets.
Further, the price action analysis suggests an increased risk of a deeper pullback in the short-run.
So this chart here reflects a couple of things:
- High volume bearish doji reversal
- Falling tops or lower highs pattern
- The relative strength index favors the bears (below 50.00)
- Strong support at $9,132 (confluence of 50-MA and rising trend line).
A doji candlestick forms when asset’s open and close are virtually equal. A bearish doji reversal occurs when the doji candle is followed by a big red candle, as seen on the above chart, and indicates a bullish-to-bearish trend change.
Adding credence to the bearish scenario is that volumes have shot up during the price drop over the last 24 hours. A high volume drop could be an indication that bulls are losing control.
What to watch out for
The doors look open for a drop to $9,000. A close below $9,202 (38.2 percent Fibonacci retracement) could yield a sell-off to $7,793 (61.8 percent Fibonacci retracement). However, the 10-day MA (seen today at $9,000) is still sloping upwards, thus losses below the same are likely to be short-lived.
Also, a weak close today would confirm a bearish doji reversal on the daily chart. It would indicate a long-term bullish-to-bearish trend change.
Bullish scenario: Consolidation above the $10,000 mark for a next couple of days would improve the odds of bitcoin moving to fresh record highs.
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