The bitcoin price shufflings of the week reviewed
All-in-all, it has been a good week for price performance in cryptocurrencies. The price of bitcoin closed the week with an overall gain after starting the week off with a drop.
However, the downward trendline which played a big role in 2018 has been brought back into our attention. Price is starting to exhibit similar patterns to those that it was showing in the months leading up to the almost 50% drop that took place in mid-November.
Price has been consolidating for almost two months with no significant movements taking place on the weekly chart since the start of January. It has also been forming a series of higher lows and lower highs.
Maybe the trendline is an arbitrarily drawn dotted line. Or maybe it puts higher odds on price dropping significantly in the following weeks. Either way, it is a line that we will be monitoring and as a result of it, we are placing increased odds on downward movements in the longer-term outlook.
In the shorter term outlook, if the price can continue its general upward trajectory which kicked into action on pancake Tuesday, then we will be looking at $4150 to $4250 as an area of seller liquidity. Price has entered this territory several times to find sellers willing to push the price down. A break above this point would very likely represent a significant change in market conditions. In this scenario, we will likely be seeking long positions on price pullbacks and monitoring $4625 as an area of potential resistance.
One other interesting thing to note with performance during the week is the relationship between price performance in litecoin and the price performance in bitcoin. Litecoin often acts as a leading indicator to price performance in bitcoin when it makes a significant move. The same took place this week where litecoin increased 4.4% at midday on Tuesday. Bitcoin increased 0.14% over the hour where litecoin was making this move but followed up with a 2.8% increase in the following hour.
Why does this matter? Well, it means that if litecoin has made a significant move in a short period of time and bitcoin hasn’t moved at all, there is increased odds that bitcoin will follow up with a significant move in the same direction. These are the kind of odds we like to take when trading.
However, the downward trendline which played a big role in 2018 has been brought back into our attention. Price is starting to exhibit similar patterns to those that it was showing in the months leading up to the almost 50% drop that took place in mid-November.
Price has been consolidating for almost two months with no significant movements taking place on the weekly chart since the start of January. It has also been forming a series of higher lows and lower highs.
Maybe the trendline is an arbitrarily drawn dotted line. Or maybe it puts higher odds on price dropping significantly in the following weeks. Either way, it is a line that we will be monitoring and as a result of it, we are placing increased odds on downward movements in the longer-term outlook.
In the shorter term outlook, if the price can continue its general upward trajectory which kicked into action on pancake Tuesday, then we will be looking at $4150 to $4250 as an area of seller liquidity. Price has entered this territory several times to find sellers willing to push the price down. A break above this point would very likely represent a significant change in market conditions. In this scenario, we will likely be seeking long positions on price pullbacks and monitoring $4625 as an area of potential resistance.
One other interesting thing to note with performance during the week is the relationship between price performance in litecoin and the price performance in bitcoin. Litecoin often acts as a leading indicator to price performance in bitcoin when it makes a significant move. The same took place this week where litecoin increased 4.4% at midday on Tuesday. Bitcoin increased 0.14% over the hour where litecoin was making this move but followed up with a 2.8% increase in the following hour.
Why does this matter? Well, it means that if litecoin has made a significant move in a short period of time and bitcoin hasn’t moved at all, there is increased odds that bitcoin will follow up with a significant move in the same direction. These are the kind of odds we like to take when trading.
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Tweet at us @adaptiveIO