Bitcoin – Take Advantage Of Any Dip Below 10K

Bitcoin and Ethereum had both advanced quite significantly since our last in depth Bitcoin analysis. Not only did Bitcoin breakout to the upside, it already went up to US$12,500 and is now experiencing a recovery after a first and brief dip back below US$10,000. Should be see another pullback of Bitcoin – Take Advantage Of Any Dip Below 10K!

Review

After the price of Bitcoin had been consolidating sideways primarily between US$9,000 and US$10,000 for over 11 weeks, the expected and timely announced breakout from the consolidation triangle finally occurred on July 21st. As always, everything happened quite quickly during such breakouts, and Bitcoin shot towards US$12,100 with just 12 days. After a brief pullback, bullish market forces were able to push Bitcoin up to almost US$12,500 by August 17th. However, this high point reached in mid-August has not been seen again to date.

Although Bitcoin held up quite well at elevated levels between US$11,100 and US$12,000 over the following two weeks, since September 1st the bears have been taking over control. The sharp sell-off in US tech stocks such as Tesla (-34% in 4 days) led to cross-sector profit taking and short-term panic. Bitcoin prices suddenly lost ground and fell sharply down to US$9,830. Likewise, Ethereum and the booming DeFi-sector entered a sharp correction relatively sudden as well, which also contributed to the short-term shock.

In the meantime however, the crypto sector has already regained its footing and Bitcoin is trading at just under US$10,900, and hence staged a significant recovery (+11.4%) above the psychological mark of US$10,000.

Technical Analysis For Bitcoin

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Bitcoin Weekly Chart as of September 17th 2020, Source: Tradingview. Bitcoin - Take Advantage Of Any Dip Below 10K!

Bitcoin Weekly Chart as of September 17th 2020, Source: Tradingview

On the weekly chart, Bitcoin has been able to overcome the downtrend that had emerged since the beginning of 2018 over the past two months. One after the other, the fan consisting of three downtrending lines was overcome. What is still missing would be a higher high compared to summer 2019, i.e. prices above approx. US$13,800. The big picture is thus only slowly but steadily improving. This next necessary relief with prices above US$13,800 would likely activate a rally towards the all-time high at US$20,000. After that, a breakout above 20,000 USD and thus a new all-time high would be necessary for Bitcoin to officially return to its longterm bull market.

Another striking feature of the weekly chart is that Bitcoin prices do not really want to let go of the multi-year uptrend line (in grey). Although the undercut in March caused the corona crash (technically speaking), in July Bitcoin was already trading above this old trend line again. The relapse below in the last two weeks does not look tragic in the big picture. The already mentioned downtrend fan should most likely absorb this pullback in the range of US$8,500 to US$9,800.

The Stochastic Oscillator has an active sell signal

Somewhat negative however is the active sell-signal from the Stochastic Oscillator. This makes it clear that the pullback is probably not over yet. A really good contrarian buy-signal based on a strongly oversold weekly stochastic is still at least a few weeks away and would require futher price decrease.

In this respect, the weekly chart in the run-up to the US elections suggests a somewhat confusing consolidation between US$9,500 and US$12,000. If the renewed breakout above US$12,500 is successful, the Bitcoin bulls will only have to overcome the resistance around US$13,500 and US$14,000 to generate enough momentum for a first attack on the all-time high at US$ 20,000. On the downside, prices down to US$8,500 are conceivable, but not very likely. The round psychological number of US$10,000 should be difficult to break on a weekly and especially monthly closing price basis. Short-term dips towards US$9,900 to 9,000 are still possible, however, and would offer a pretty good buying opportunity!

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