Trade Recommendation: Short Bitcoin
A vertical ascent is virtually impossible to sustain. After moving above 19,000 on December 16 on Bitstamp from 6,525.17 on November 13, the market plunged along with all the euphoria behind it. It went to as low as 11,159.93 on December 22, creating a hammer candle on the bi-hourly chart. Bitcoin rallied to as high as 16,480.52 today, but unfortunately, buyers at this level were scarce as shown by the decrease in volume.
The cryptocurrency effectively failed to break resistance at 16,500 and in the process, it created a lower high which potentially signals the end of the bull run. Bitcoin’s bi-hourly chart shows a massive bearish structure that hinges on support at 14,000. If the cryptocurrency moves below this level, the trend will be reversed and Bitcoin could fall to as low as 9,000.
The strategy is to wait for Bitcoin to break support at 14,000. The ideal situation is for the market to initially hold that support level. The ensuing rally will most likely fail to move above resistance at 15,800. That price action should increase the likelihood of Bitcoin’s nosedive to 9,000.
Bi-Hourly Chart of Bitcoin on Bitstamp
As of this writing, the Bitcoin/Dollar pair is trading at 15,184 on Bitstamp.
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.
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