The recent move lower in Bitcoin price was caused by a strong dollar rather than a weak Bitcoin. As always, when trading a financial asset, make sure that you consider both sides of the story.
Just like gold or silver, Bitcoin gave back some of its recent gains. As the world’s reserve currency found a bottom, Bitcoin dropped over $2,000 from the $12,000 to $10,000. Unless the USD turns, Bitcoin looks poised to revisit its 200-week moving average below $7,000. However, the potential head and shoulders pattern it forms here might still result in higher values during the right shoulder’s consolidation.
Bitcoin 200-Week Moving Average Currently Sitting at $6,700
Bitcoin’s 200-week moving average rises by about 3% a month, or $200/month. Bitcoin hodlers already have calculations in place as to how long it takes for the Bitcoin price to reach the level where they may end break-even.
However, technical analysis works both ways. The thing is that a moving average is just that – an average. On a sustained move lower on Bitcoin price, the average may end up declining. In other words, besides the fact that it provides important support due to the timeframe (i.e., weekly), it has no prediction power, and it does not signal only upside potential. That can change in the blink of an eye.
Bitcoin Price Technical Analysis
At the current market price, Bitcoin sits at dynamic support provided by the neckline of a head and shoulders pattern. It could bounce to meet its projection ($12,000), or it could break lower towards the measured move.
Therefore, both conservative and aggressive traders have something to trade here. Aggressive bears would want to see $9,000 give way before going short for the $6,700 where the 200-week moving average sits. Conservative traders would want to wait for a bounce above $11,500 before going short, and then add on a break at the neckline. In both cases, a move above $12,300 would invalidate the bearish scenario.
Don’t miss a beat! Follow us on Telegram and Twitter.
Bitcoin Price Forecast
More content
- Download our latest quarterly market outlook for our longer-term trade ideas.
- Follow Mircea on Twitter.
- Do you enjoy reading our updates? Become a member today and access all restricted content. It is free to join.