Resistance? Correction? It’s A Good Thing
Bitcoin crossed the $12,000 threshold earlier this week in a move that can only be called Ballistic. The world’s leading digital currency gained more than $2,000 in less than 24 hours, moved up to set a new 17 month high, but was not able to hold the gains. Not all of them anyway. The move up to $14,000 was met with resistance but that is a good thing. The market needs these periodic sell-offs to weed out the weaker hands, let folks take profits, and allow the next round of buyers to build up some pressure. The correction from $14,000 was sharp and swift, it may lead to a deeper correction, but looking at the charts I can say definitively that the big rally in Bitcoin is not over.
The technical picture is about as robust as it could be. The breakout itself was very strong and that strength is seen in the indicators. The MACD indicator in particular is showing some strength that points to higher prices in the not too-distant future. The MACD peak associated with the move to $14,000 is an extreme peak and convergent with the rally. The extreme peak means it is the largest MACD peak in well over a year. This is an indication of market commitment, over the past year the BTC market has been in an uncertain consolidation and trending at low levels. Now the market is bullish and back in force.
The convergence of the MACD peaks, the fact they are getting higher as the BTC price moves higher, is perhaps the most telling factor of all. This condition shows that not only is the BTC market bullish, it is getting more bullish with each move higher. The combination of convergence and extremity points to a market that is bullish, getting stronger, and the most committed to price direction it’s been since the 2017 bull market.
So, what does this all mean for Bitcoin, the Bitcoin market, and making profits? It means now is a good time to buy, especially if you are a long-term holder. Shorter-term traders may want to target down-days to get in but, so long as you are buying below the $14,000 level I see potential for 42% gains over the next few months, at least. Over the next few weeks it will be important to track prices to see what kind of pattern emerges. The market has been rallying hard, if it were to produce a recognizable consolidation pattern my 42% target is low, very low. A consolidation and continuation pattern at this level, with $14,000 as the resistance point, could lead to an explosive rally that will surpass the $20,000 level with ease.