Bitcoin Technical Analysis – Week of November 15

Last week we said: 

Bitcoin’s price action is incredibly bullish, but given historical resistance zones and overly greedy markets, I expect the price to retract before continuing the bull trend. Support zones are at $14.8k and then $12.8k. If this does not occur, a retest of $16k is likely. Overall, I am slightly bearish in the short term, but still very bullish in the long term. 

Bitcoin did retrace to the local support zone around $14.8k before continuing its uptrend, so our prediction was correct. 

BTC/USD 4H chart from TradingView

In fact, our prediction was almost completely perfect, with the highlighted “wick” down on November 9 bottoming out at exactly $14,806 before continuing up. BTC then shot up to $16.5k before consolidating at $16k, creating another case of “support become resistance”, and now trending upward toward $18k. At the time of writing, BTC is trading around $17,800. 

Bitcoin is approaching it’s all time high of $20k. 

As we speak, there is not a clearly defined resistance zone before the all time high, which will pose a seriously strong resistance before BTC is setting new records. Let’s take a look at the daily chart to get an idea of where the market stands. 

BTC/USD Daily Candle Chart from Tradingview. 

BTC has broken the last critical resistance zone of $17.2k and is trending toward the all time high. I would not be surprised if BTC retraces a bit and establishes the $17.2k zone as support before attempting to crack the ATH ceiling. If $17.2k support fails, there is support at $16k and $14.8k still. 

BTC/USD Daily Candle Chart from Trading View

The above chart is still the daily candle chart, but with moving averages shown. As expected, all of the averages are incredibly bullish, inclined upward, and showing no signs of slowing down. 

Daily Candle, RSI

The RSI shows that the market is heavily overbought, and is at risk of retracing and/or consolidating before attempting to break the all time high. However, BTC tends to behave very irrationally when FOMO begins to set in, meaning that the market can trade with intense volatility. This makes it unlikely that BTC will break the all time high until the RSI cools off a bit. 

BTC/USD Weekly Candle Chart, RSI shown

One possible scenario is that BTC forms a wedge pattern over the very long term, as shown in this image. While this image stretches out over 10 years into the future, a potential long term trend between these two lines could play out if BTC does not break the ATH. 

Let’s take a look at market sentiment and see what that tells us. 

Investor Sentiment

Crypto Fear/Greed Index, from Alternative.me

Like we always say, the fear/greed index gives us an idea of how the market is about to move. In general, we try to trade the opposite of the index. When it says “greed” – it’s a good time to sell, and when it says “fear” it’s a good time to buy. This is a good mid-term indicator, but does not necessarily indicate the end of a bull or bear trend. 

In the past few weeks, we have used this indicator to say that a pullback is likely. While pullbacks have happened, this indicator reading “extreme greed” DOES NOT MEAN that the bull trend is over. You should instead look for short term pullbacks and increase your position. This indicator is updated once daily. 

While this indicator shows a lot of greed in the markets, FOMO is a real factor in BTC and I would not trade on this indicator alone. 

Lets take a look at fundamentals. 

Fundamental Analysis

The total hash rate has rebounded slightly but is still significantly down from its recent high in October. The HAsh rate indicates how competitive BTC mining is. The decline is somewhat strange, considering mining is extremely profitable from BTC rising in value. 

Miners revenue continues to climb along with the price of BTC. 

It’s a bit perplexing that the hash rate has declined. The hash rate is part of a formula that gives us the inherent value of bitcoin. In general, if the hash rate is high that means that competition for mining Bitcoins is high, and the energy consumption to mint one BTC is high also. This is a slightly contrarian indicator to the bull trend we have been observing. 

Conclusion

BTC continues to move upward and smash all overhead resistances. Currently, the only major resistance above BTC is the all time high of 20k. We have been waiting for a long time for BTC to return to these price levels, and good days are certainly ahead. However, I would expect some consolidation before BTC breaks $20k. It may be likely that BTC tests the $20k level, but I do not expect it to break the ATH until the RSI cools down and the market is less greedy. If BTC does manage to break all of the rules and smash through $20k, the sky (or should I say the MOON) is the limit! 

This is not investment advice. This article is written for entertainment and educational purposes only. Do your own research and talk to your financial advisor before making any investment decision. 

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