Bitcoin Blasts Off, But Bearish Trend Still Beckons
Matt Weller, CFA, CMT October 28, 2019 1:13 PM
Bears could see the current stall at trend line resistance as an opportunity to bet against the near-term momentum...
Last week, we highlighted a Bollinger Band “Squeeze” pattern in Bitcoin, noting that “the market is poised to see a breakout and a return of volatility.”
While we were looking for a bearish continuation at the time, a major fundamental development before the weekend “flipped the script” for the entire crypto market. Xi Jinping, the President of China (a country that was previously hostile to cryptoassets), stressed that the country should “commit to accelerating the development of blockchain [the technology that underpins Bitcoin and other cryptoassets] and aim at taking the leading position in the emerging technology.” According to Xi, China will promote using blockchain technology to solve real problems in the existing financial system and is “ready” to launch its own national digital currency after five years of development.
Coming from the leader of the world’s second-largest economy, this strong endorsement of the potential for blockchain technology led to a massive rally in Bitcoin and the crypto markets more broadly. After finding support at previously-identified support in the $7300 area, Bitcoin surged nearly 40% in less than 48 hours to hit an intraday high above $10,300:
Source: Trading View, FOREX.com
Prices have since settled down in the mid-$9,000s, solidly above the late-September to mid-October range. Technically speaking, Bitcoin still remains in a textbook bearish trend off its June highs, with the general trend of lower highs and lower lows intact.
While this weekend’s fundamental news may mark a more significant turning point for the cryptocurrency, bulls who missed the initial surge may want to wait to see if prices can close above the bearish trend line and key psychological resistance in the $10,000 area before buying. Meanwhile, bears could see the current stall at trend line resistance as an opportunity to bet against the near-term momentum for a retracement back toward $9,000 or below this week.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.