Bitcoin Gold Update: Shows Profit Potential
Just like many altcoins, Bitcoin Gold (BTG/BTC) was in a downtrend for most of 2018. It generated a 2018 high of 0.0317 on January 13. From there, the market got trapped in a brutal downward spiral. It nosedived to as low as 0.002336 on August 14. At that point, Bitcoin Gold was down by over 92% from the 2018 peak. This made BTG/BTC one of the worst cryptocurrency performers this year.
The only good thing to come out of this awful downtrend is that the market has limited downside potential now. Additionally, very little time was given to retest resistance levels. As a result, Bitcoin Gold bulls are in the position to rampage. In this article, we show how BTG/BTC offers significant profit potential.
Inverse Head and Shoulders Breakout
One of the best ways to end a long bear winter is by breaking out of an inverse head and shoulders reversal pattern. Do a quick Google search and you’ll see that this is one of the most reliable, if not the most reliable, reversal pattern.
The idea behind this pattern is that participants reject lower prices by forming the right shoulder or a higher low. The reversal comes to completion after the market breaches the neckline with huge volume.
These are the qualities we observed in Bitcoin Gold’s recent breakout.
Daily chart of BTG/BTC
A quick look at the daily chart shows that Bitcoin Gold has met the requirements of an inverse head and shoulders reversal:
- formation of the higher low (right shoulder).
- breach of the 0.0045 neckline on November 4.
- volume expansion on breakout (over 412% of the daily average).
In addition, Bitcoin Gold has managed to flip resistance of 0.0045 into a support level. Take note: 0.0045 used to be a firm weekly resistance. In July 2018, the market attempted to breach this level for three straight weeks but to no avail. Now that bulls have flipped it into support, they’ll rely on its durability to launch a strong uptrend.
Inverse Chart Bubble Burst
Bitcoin (BTC/USD) is a good example of what happens when a bubble bursts. Prices go south swiftly. This happens because little time is given for consolidation and base-building. Consequently, sellers become unstoppable as the market struggles to find an area where to bounce.
BTC/USD bubble burst
Now, back to Bitcoin Gold. With the technical reversal, the market is now in a clear uptrend. However, an uptrend can be difficult to imagine because we’re not used to seeing something go up without the interference of an outside force. Thus, it is easier to imagine an uptrend using an inverse chart. This way we can see how gravity might do its job.
Inverse chart of BTG/BTC
The blue lines represent former resistances that have not been retested. Thus, they are considered as weak “support” areas. On the other hand, the green lines are strong “support” levels. The market consolidated for a time in these price points before moving up.
With the trend reversal, we can say that the bubble of this inverse chart has burst. From the looks of it, the burst can drive the market down to the the second green line with ease.
Promising Daily Chart
Now that we’ve seen how the uptrend might act as an internal force that pulls prices up just like how gravity drives prices down, let’s review the daily chart to identify the key resistances mentioned above.
Daily chart of BTG/BTC
Again the blue lines are weak resistances (0.005606 and 0.011026) while the red lines are notable resistances (0.008678 and 0.014). Given these levels, we can form the expectation that BTG/BTC might easily breach 0.005606. However, it might take time and volume expansion to take out 0.008678. When it does, BTG/BTC will likely demolish 0.011026 and then struggle to go above 0.014.
At the current market level, those who are buying now may be positioning themselves for a 200% growth should Bitcoin Gold hit the target of 0.014.
Bitcoin Gold may be one of the worst altcoin performers this year but it looks ready to go on a rampage. With its recent trend reversal, the market may grow by as much as 200% in the coming months.