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Analysis

Is This a Good Time to Buy Bitcoin?

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Bitcoin market cap

It is a difficult task to call a bottom when an asset class is in a downtrend. However, using technical analysis, we can at least try to get a rough idea about the levels that can offer a strong support. Please remember that when panic sets in the decline can easily overshoot on the downside. Therefore, traders should scale into the position instead of investing all the available money at once.

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Key points

  1. A fall to the 200-day EMA has proven to be a good long-term buying opportunity in the past two years.
  2. Traders can buy 25% of the desired allocation around the $8900 levels and keep a stop loss of $7400.
  3. Averaging down is not a good trading practice. Hence, fresh positions should be avoided if the price breaks down and sustains below the 200-day EMA.

What is our track record in picking tops and bottoms?

Calling a top is a very difficult task. We tried to call a top in Bitcoin on two occasions. The first call on November 27 proved to be wrong. We had expected a dip of about 30% from the highs to about $7,000 but Bitcoin only dipped to $8595.95 levels on November 29 and that too only during intraday.

Thereafter, Bitcoin continued its incessant run and we again made a call of a top on December 08, when it was trading just above $16,000 levels. The virtual currency topped out at $19891.99 levels on December 17. This call proved to be very close to the top. Traders who sold following our call would be sitting pretty with enough money to invest at lower levels.

So, is Bitcoin a good buy after falling more than 50% in about a month and a half? Let’s see.

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Where should traders start buying?

In end-2015, the price broke above the 200-day EMA. Since then, there have been five dips to the 200-day EMA, which have proven to be a good long-term buying opportunity.

Currently, the 200-day EMA is placed at 8898. We believe that a retest of this level is likely to attract long-term buyers once again. Traders should wait and watch for about 4-hours to see whether the level is holding or not. If the level holds, 25% of the desired allocation in Bitcoin should be done around $8900 levels. The SL for this purchase should be kept at $7400 levels.

Remaining positions can be added when the cryptocurrency confirms a bottom.

We have used a log scale to fit the chart within the scale.

What are the supports in the short-term?

The current pullback is close to the 78.6% retracement level of the latest leg of the rally. We believe that the zone between $8900 and $8600 will act as a strong support zone.

However, if the bears breakdown and sustain below the 200-day EMA for three days, it will indicate weakness. The next level on the downside that can offer some support is $7500 to $7800.

We don’t advise averaging down. Traders should hold all their purchases as long as Bitcoin remains below the 200-day EMA. Long positions should again be initiated once the cryptocurrency confirms a bottom.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 8 rated postsRakesh Upadhyay is a Technical Analyst and Portfolio Consultant for The Summit Group. He has more than a decade of experience as a private trader. His philosophy is to use technical analysis for momentum trading and fundamental analysis for long-term positions. Rakesh likes to keep himself fit by lifting weights and considers himself to be a spiritual person.




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12 Comments

12 Comments

  1. Gasface

    February 1, 2018 at 7:57 pm

    Good advice my friend. I also read all of your posts at coin telegraph and I always find your advice helpful.

    Thank you🙏

    • Rakesh Upadhyay

      February 2, 2018 at 11:43 am

      Hello Gasface….

      Thank you.

  2. Brentc

    February 1, 2018 at 8:28 pm

    I find Rakesh to be the most knowledgeable in his ta. I only listen to this guy period. The one guy on here is a moron which I haven’t seen any more recommendations from lately.

    • MinerMatt17

      February 2, 2018 at 4:45 am

      Agreed

    • Rakesh Upadhyay

      February 2, 2018 at 11:45 am

      Hello Brentc,

      We all try to provide the best recommendations, according to what we see on the charts. At times, we fail miserably. Some times we succeed. The strategy is to lose small and hold the winners.

  3. douglash

    February 2, 2018 at 2:26 am

    This is clear, concise, tradeable advice, which is often missing in Hacked TA signals. Of course, it remains to be seen if it’s correct, but at least it’s clear.

    • Rakesh Upadhyay

      February 2, 2018 at 11:46 am

      Hello douglash,

      Thank you. We shall only know in hindsight if it was a correct call or not….

  4. Haspel

    February 2, 2018 at 11:32 am

    Weird that you write ‘we’ believe 8900-8600 will be a strong support zone and two hours later Mate Cser writes we should accumulate at 8200 and 7650. Don’t you guys talk to each other?

    • Rakesh Upadhyay

      February 2, 2018 at 11:51 am

      Hello Haspel,

      If you show the same chart to 100 technical analysts, all will have their own opinion on what are the levels to buy or sell at. The important take away here is that both me and Mate believe what Bitcoin is close to hitting a bottom.

      Neither me, nor Mate nor anyone in the world knows what will the exact bottom be.

      And, no, we don’t discus and provide the analysis because as a reader you should get both the versions. My assumption of a bottom in the range of $8600 to $8900 has proven wrong.

      So, now, we should wait for the decline to end and then start accumulating.

      So,

      • Haspel

        February 2, 2018 at 11:55 am

        Thank Rakesh. It’s just confusing for me to read such different opinions.

        I just read there was a big volume increase the last half hour. Could we’ve hit the bottom?

        • Rakesh Upadhyay

          February 2, 2018 at 12:09 pm

          Please don’t be confused….If you have any query, please ask us, we shall try to do our best to help you.

          Well, difficult to say. Please wait for some more time. Let’s at least stop making new lows on the 4-hourly chart. If Bitcoin sustains below the 200-day EMA for a long time, the weakness may persist.

          However, if you haven’t purchased any Bitcoin in this fall and are holding out to buy, you can start nibbling around the current levels. Say buy only about 20% of your total allocation that you have kept for Bitcoin and then wait.

          If Bitcoin falls, please hold your purchases. If it starts to recover, we can add to our positions.

          • Haspel

            February 2, 2018 at 12:20 pm

            👍🏻

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Analysis

Pre-Market: Bulls Try to Fight Back after Ugly Overnight Session

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Following the steep late-day downturn on Wednesday, which followed the not-to-hawkish FED meeting minutes, Asian markets and US equity futures continued lower with a vengeance. The very active overnight trading is another sign of the regime change in traditional financial markets that we have been monitoring for the last two weeks, ever since the “Black Monday of 2018”.

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Dow Futures, 4-Hour Chart Analysis

EUR/USD Changing Behavior

The European session brought about an oversold bounce that stabilized markets from stocks to currencies. The EUR/USD pair that has started acting “normally” considering its relationship with US Treasury yields lately, is headed south once again, trading only 0.5% above its recent correction lows after clearly breaking below the rising trendline.

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EUR/USD, 4-Hour Chart Analysis

The bull-trap that we identified a few days ago was the start of the current leg lower, and if the regime change will be persistent, the most traded forex pair could be back to the role of the “risk-on/risk-off” indicator that has been the privilege of commodity currencies in the last couple of weeks.

USD/JPY, 4-Hour Chart Analysis

The Japanese Yen is showing notable strength after its overbought dip, and the primary safe-haven currency could be in for more gains, should the risk-selloff continue. The Yen also gained ground on the common European currency, following the dovish ECB meeting accounts and the misses in the German IFO business climate indicator and the British GDP, which all question the European growth-monetary tightening narrative.

Canadian Dollar in for a Wild Ride

USD/CAD, 4-Hour Chart Analysis

With the Canadian retail sales report and the US crude oil inventory data coming out soon, forex traders should expect sizeable moves in the recently weak currency, while the USD should also be very active during the US stock market session.

All eyes are on Treasury yields again, with the slight correction today helping the bounce in stocks and other risk assets. The Nasdaq could be the motor of a stronger rally on Wall Street, but we wouldn’t bet the house on that, as the short-term technical setup remains bearish, and a re-test of the correction lows is still the most likely scenario for the coming weeks.

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 109 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Analysis

Crypto Update: Bitcoin Tests $10,000 amid Correction

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The altcoin-triggered correction continued in the segment overnight amid the renewed sell-off in global stocks, with a slight bounce in Asian trading and a subsequent dip after the European open. The major coins are all down by more than 5% since yesterday, but for now, the momentum of the move is not worrying, and most importantly the leadership of the rally is holding up relatively well.

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Bitcoin bounced off the key $10,000 level, the $200 support zone held in Litecoin, Monero is still in its consolidation pattern above $280, and only Dash showed deterioration since yesterday, but the long-term picture remains encouraging even in Dash’s case.

LTC/USD, 4-Hour Chart Analysis

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The above-mentioned levels in the technically strongest coins are not even the last line of defense for bulls, as the preceding strong rally left several key levels behind which could serve as the basis of the next leg higher.

Also, we expect the currently negatively diverging coins, led by Ethereum and Ripple, to start showing strength as the short-term momentum reaches oversold territory, and good entry points might be close both for traders and long-term investors.

BTC/USD, 4-Hour Chart Analysis

BTC touched the $10,000 support level, but for now, the technically more important $9000-$9200 zone is not in danger, and the short-term momentum indicators are already neutral thanks to the correction.

That said, more downside is likely in the coming days, but investors and traders should be looking for reversals to enter new positions, as we expect the uptrend to continue, with targets ahead at $11,300, $13,000 and $14,250.

Ethereum Provides a Glimmer of Hope

ETH/USD, 4-Hour Chart Analysis

Although bears are still in control regarding the short-term picture in the second largest coin, this morning ETH didn’t hit a significant new swing low, and that could be the first sign of relative strength, with the $845 support not far above the current price level, and the MACD indicator is already near oversold territory.

Despite the slightly positive sign, short-term traders should remain defensive concerning the weaker coins, while long-term investors should still accumulate the currencies on the dips.

Stay tuned for our detailed technical analysis later on today.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 109 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Analysis

Daily Analysis: The Usual Post-Fed Pump and Dump…

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Wednesday Market Recap

Asset Current Value Daily Change
S&P 500 2700 -0.51%
DAX 12,470 -0.14%
WTI Crude Oil 61.28 -0.83%
GOLD 1325.00 -0.43%
Bitcoin 10480 -8.71%
EUR/USD 1.2336 0.61%

The script that we laid out for the FOMC meeting minutes has worked almost perfectly, with the major US indices completing a roundtrip that triggered most of the “weak” stop-losses, before a powerful move lower into the close.

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The predictable late-session intraday volatility aside, markets were quiet and choppy for most of the day, and the Dow, the Nasdaq, and the S&P 500, all closed just slightly lower, while covering 2% during the session, with the tech-index’s relative strength evaporating in late trading.

S&P 500 Futures, 4-Hour Chart Analysis

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Forex Markets and Commodities

What drove the decline in equities was the renewed rise in US Treasury Yields, and to answer the most important question of the day; yes, in fact, the yield-Dollar correlation of the past few months broke down, and today the Greenback rallied together with bond yields.

10-Year Treasury Yield, 4-Hour Chart Analysis

While that is how it should work according to common sense and economic theory, the recent inverse correlation helped a lot of trends in reaching extremes, and those extremes now might reverse.

The outperformance of US markets, the Euro strength, and the weakness in European equities were among those trends, and it’s interesting to see that the bullish technical setup in the EUR/USD is crumbling and the US indices are in the deepest correction since the Brexit.

EUR/USD, 4-Hour Chart Analysis

While there is no assurance that these changes are permanent, for now, we remain short-term bearish on US equities, and continue to look for upside in the battered Dollar.

At the end of the day, the Dollar finished higher against all of the major fiat currencies, although the Yen showed notable relative strength amid the stock rampage near the closing bell. Interestingly the USD vs. risk-on pairs trend continues to lead the other asset classes, as we have noted several times, and that could be something to monitor in the coming days and weeks.

Commodities had a mixed but ultimately bearish session, with oil and gold suffering both suffering losses amid the risk-off shift, although crude already traded lower before the FOMC release, while gold traded in close correlation with the Euro throughout the day.

Cryptocurrencies

The segment had a decisively bearish session, with only a few coins showing considerable relative strength amid the sell-off. Bitcoin, Litecoin, Dash, and Monero are still the leaders of this cycle, while Ethereum is the most notable laggard, pulling most altcoins lower as well.

ETH/USD, 4-Hour Chart Analysis

On a positive note, the majors held up relatively well amid the stock turmoil, but the next few days will be crucial, as important support levels could be tested. That said, most of the coins are well clear of the crash lows, and there is more than enough support below that, combined with the still present bullish signs should keep investors confident that a new uptrend is underway and new rally highs are ahead.

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 109 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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