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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.

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.

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 9 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

Forex Update: Dollar Drops, Risk-On Currencies Rally on Trade Optimism

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Forex Market Snapshot

Asset Current Value Daily Change
EUR/USD 1.1366 0.43%
GBP/USD 1.2634 1.19%
USD/JPY 113.25 -0.10%
AUD/USD 0.7223 0.26%
GOLD 1,249 0.09%
WTI Crude Oil 52.16 0.37%
BTC/USD 3,444 2.74%

The forex market saw another very active session, with the key topics of the recent weeks still making headlines and causing wild swings in the major currency pairs. The Brexit saga took another turn today, as Prime Minister Theresa May faced a no-confidence vote in her party following the delay of the vote on the draft plan in the British Parliament.

The result of the vote is not yet known, but analysts expect the PM to win the vote after she stated that she won’t run for another term in light of the Brexit-related chaos. The Pound has been rallying so far today together with most of the risk-on currencies, with yesterday’s decision to grant bail to the recently arrested CFO of Huawei boosting investor confidence across the globe. President Trump also hinted on progress on the ongoing talks, and that led to a sizable drop in the USD and in US Treasuries, as safe-haven flows reversed.

Technical Analysis

USD/CNH, 4-Hour Chart Analysis

The Dollar/Yuan pair, which has been crucial for all markets in recent months, broke its short-term uptrend on the news, and it fell to its lowest level in almost a week. The Chinese currency is still weaker compared to its post-trade-truce levels, but it’s also clearly above its October lows, despite the continued weakness in the Chinese economy thanks to the trade-related optimism.

That said, the long-term trend is clearly positive in the pair, and negative in the Yuan, and the credit-related troubles, which will likely weigh on the currency for years, will likely outweigh the topic of trade next year. We still expect the likely trade deal to cause a strong bounce in Chinese assets, but it’s unlikely to change the broader trends especially given the broad bearish shift in global risk assets.

EUR/GBP, 4-Hour Chart Analysis

The EUR/GBP pair is testing the recent break-out level amid the continued Brexit uncertainty, with the 0.90 level being in focus throughout the day. The short-term uptrend remains clearly intact in the pair, and bulls remain in control of the market from a long-term perspective as well.

Strong support is found near 0.8920 and a move towards the 2017 highs near 0.93 is possible in the coming months, even as both currencies remain among the weaker majors, and European growth is clearly weakening.

AUD/USD, 4-Hour Chart Analysis

The AUD/USD pair is currently trading in a bearish wedge pattern amid the mixed price action in commodities, and the Aussie has been acting weak today, suggesting a likely move below the 0.7200 level in the coming days.

The currency is neutral on both time-frames currently, but a move below 0.7165 would mean that the long-term downtrend will resume following the two-month-long correction, that broke the long-standing declining trendline.

Gold Futures, 4-Hour Chart Analysis

Gold has been showing relative strength today compared to the other main safe-haven assets, which pulled back thanks to the positive developments in the US-Chinese diplomatic spat, and the precious metal successfully tested the recent break-out level.

Gold is very close to confirming a broader trend change, although it needs to stay above $1235, and a move above $1260 would suggest a test of the next major resistance zone near $1300, with strong support, found at $1215 and $1080.

Key Economic Events Tomorrow

 

ChartBook

Forex

EUR/USD, 4-Hour Chart Analysis

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

EUR/JPY, 4-Hour Chart Analysis

AUD/JPY, 4-Hour Chart Analysis

GBP/JPY, 4-Hour Chart Analysis

USD/CHF, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

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 414 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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Altcoins

Zcash Price Analysis: ZEC/USD Shaping Up for Another Potential Fall; Coinbase Giving Zcash Away

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  • Zcash saw a decent bounce on Wednesday, jumping over 6%, but technical there are still some vulnerabilities.
  • Coinbase as part of their ‘12 days of Coinbase’ campaign, will be giving away ZEC to families in need in Venezuela.

ZEC/USD enjoyed a string of gains on Wednesday, jumping as much as 6% in the session. This appears to be somewhat of a consolation move for the bulls, as the sellers look to be exhausted. There has been little direction since the heavy pressure to the downside slowed down and stabilized on the 7th December. The price through the month of November dropped a hefty 63%, with that being carried through into December.

Coinbase Giving Away ZEC

Just a couple of weeks ago the popular U.S. cryptocurrency exchange Coinbase announced the listing of ZEC. They are now facilitating ZEC trading via Coinbase Pro, the proprietary trading platform. The service was made available for Coinbase Pro users in the U.S, U.K, the European Union, Singapore, Australia and Canada. On the back of this, ZEC/USD had jumped as much as 20% over the course of the day, following the announcement.

Most recently, Coinbase launched a Christmas campaign, which entails a series of announcements, dubbed “12 days of Coinbase.” Today was the second day, in which they detailed a gift in aid for distressed families in Venezuela. To provide help to these families, Coinbase will be donating $10,000 in Zcash to GiveCrypto.org. This is a nonprofit organization, which distributes cryptocurrency to people within poverty struck living conditions. $1.00 USD worth of ZEC will be deposited into crypto wallets of over 100 families in Santa Elena every day for three months.

Technical Review – ZEC/USD

ZEC/USD 4-hour chart

As touched upon above, ZEC/USD had been provided with a relief bounce in the session. However, price action is still moving within a bearish pennant pattern structure. This has been forming since the 7th December, within this consolidation mode. Price action is narrowing following the steep drop just some days ago. Technically, it does typically spell further potential trouble when behavior is as such currently seen – generating a calm before a further potential storm caused by the rampant bears.

ZEC/USD weekly chart

Given the above-mentioned pattern formation, ZEC/USD is vulnerable to another steep drop. Near-term support of this pennant should be noted at around $54.60. Should the bears manage to force a break, then expect the flood gates to open. A further wave of selling would likely follow, with the next major area of support, not seen until the $30 territory. The price was last down at these levels in February 2017. A demand zone can be seen running from $35 down to $26.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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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4.5 stars on average, based on 81 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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Analysis

Crypto Update: Another Rally Attempt in Crypto-Land

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The major cryptocurrencies are all trading slightly higher today, following two bearish days that brought them back to last week lows, and for now, another breakdown has been avoided, despite the overwhelmingly bearish broader picture. The modest bounce left our trend model on sell signals across the board, and odds continue to favor new lows in the coming period, so traders and investors should remain defensive here.

The top coins are trading well below the weekend bounce-highs and without new swing highs, the short-term trend also remains clearly bearish, even considering the deeply oversold long-term momentum readings and the abysmal sentiment. So while a larger scale bounce remains possible in the coming weeks, perhaps following a failed breakdown pattern, bulls should still be patient until we sell clear technical improvements in the segment.

With that in mind, traders and investors shouldn’t enter positions even in the slightly stronger coins, and odds still favor the continuation of the bear market, with new lows likely in the coming days. That said, a successful test or a failed breakdown could trigger a larger scale correction, with the broader picture still being deeply oversold and with investor sentiment still being very negative. For now, there is no sign of an imminent rally, with all eyes on the $3000 in Bitcoin.

BTC/USD, 4-Hour Chart Analysis

Bitcoin rallied as high as $3450 today, but it failed to get close to the $3600 resistance and the weekend high, so the short-term downtrend remains intact despite the bounce. For now, our trend model is still on sell signals on both time-frames, and traders should stay away from entering new positions here, with the long-term picture also being clearly bearish.  Further resistance is ahead in the $4000-$4050 zone, while key long-term support is found near the $3000 price level.

ETH/USD, 4-Hour Chart Analysis

Ethereum is stuck below the key $95-$100 zone even following today’s bounce, keeping the coin on a short-term sell signal in our trend model. Odds still favor a move towards the next major support zone between $73 and $75, and only a quick recovery above the primary resistance zone could change the short-term trend.

The steep long-term downtrend is clearly intact in the coin, and traders and investors should still not enter new positions here, with further strong resistance zones ahead near $120 and $130.

Altcoins Avoid Breakdown but Strong Resistance Zones Lie Ahead

Dash/USDT, 4-Hour Chart Analysis

Despite yesterday’s weakness, last week’s lows held up even in the relatively weaker majors, and although that’s an early sign of stability, it’s not enough to warrant upgrades in our trend model. With still no bullish leadership present in the segment the continued technical weakness in the lagging coins, such as Dash reinforces our bearish long-term view.

XRP/USDT, 4-Hour Chart Analysis

Ripple only experienced a weak bounce, and although it continues to trade near the $0.30 level, the coin is still among the relatively weak coins from a short-term perspective and the renewed long-term sell signal is also in place.

We still expect a move towards the prior bear market low near $0.26, with a weaker support level found above that near $0.28, and traders and investors shouldn’t enter positions here, with resistance levels above $0.30 ahead at $0.32, $0.3550, and $0.3750.

Litecoin/USD, 4-Hour Chart Analysis

While Litecoin managed to hold up above its recent swing low and the $23 support level, it remains in steep short- and long-term downtrends, and we would need to see significant technical strength for even a short-term trend change.

Our trend model is on sell signals on both time-frames, and below $23, the next major support zone is found between $20 and $20.50 with strong resistance ahead near $26 and between $30 and $30.50.

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 414 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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