Trade Recommendation: Bitcoin
Our May 12, 2019 trade recommendation for bitcoin (BTC/USD) hit both targets. Yesterday, June 21st, the leading cryptocurrency climbed as high as $10,245. Those who stuck to the trading plan grew their investments by more than 55% in a little over a month.
Bitcoin’s ascent has been nothing short of mindblowing thus far. The cryptocurrency has managed to triple its value in about four months. This face-melting climb is making everyone bullish, including numerous media outlets who are reporting that the fear of missing (FOMO) is in full swing. We believe that at this stage, when everyone appears to be euphoric, you have to take the contrarian stance. Look left when everybody else is looking right.
Technical analysis shows that BTC/USD is showing overheated signals on the longer timeframe. A look at the monthly chart tells us that bitcoin is facing a heavy wall while bulls appear to be overextended. $10,000 is not only a key psychological resistance, but it is also a massive supply area. Regardless of these signals, bitcoin has managed to slice through $10,000 like a hot knife through butter.
With such a bullish development, we expect the cryptocurrency to consolidate around $10,000 before making its next move up. There will be some profit taking at this level which will likely prevent bitcoin from moving higher in the next few weeks. The consolidation will be good for the long-term health of the market as it allows bitcoin to convincingly flip a former resistance into support.
Therefore, the strategy is to buy on dips as close to $10,000 as possible. As long as bulls keep bitcoin above this level, we can expect the market to target $11,600 first and then $14,000.
The process may take a month.
Monthly Chart of Bitcoin/US Dollar on Coinbase
Summary of Strategy
Buy: On dips as close to $10,000.
Targets: $11,600 and $14,000.
Disclaimer: The writer 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.