Bitcoin Market Report: 5 April 2019
Bitcoin price action has been extremely volatile, following 20% gains on Tuesday.
After bitcoin’s stellar $1000 + rise earlier this week, a pullback was to be expected. From below a strong resistance zone at $4,200, BTC surged above $5,000, before another push higher to a top of $5,345 (Bitstamp) on Wednesday.
This extreme move – even for bitcoin – pushed indicators such as RSI well into oversold territory on every meaningful timeframe. Additionally, since there was no obvious cause for the breakout beyond the technical reasons, traders predictably took profit.
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The immediate reaction saw a fall to $4,799 – still well up on the week. Bitcoin currently sits just below $5,000, where a new band of resistance lies.
Conventional technical analysis suggests that a retest of support at $4,200 is to be expected. This was bitcoin’s first higher high in a bear market that has lasted 15 months. After such a breakout, it is normal for the market to confirm the validity of the move by revisiting that resistance line, ideally consolidating above it as new support.
There is, naturally, some disagreement about what this development means. Crypto Twitter has been quick to call it the end of the bear market, now targeting $6,000 for the next move. (Incidentally, $6k is likely to prove extremely strong resistance, since it was such strong support on the way down. Unprecedented amounts of BTC changed hands in the $6k zone and it will take significant buying pressure to push above this.)
However, some well-known traders such as Alessio Rastani and Tone Vays are arguing that the bear market is not over. This move higher can be thought of as a bull trap, or the top of a 4th wave in an Elliott Wave cycle – with a 5th wave pushing bitcoin’s price back down to $3,000 and potentially lower. Vays, for example, does not expect an end to the bear market until the autumn.
For now, $4,200 is the line to watch. To the upside, $5,000, then $5,500 are resistance – before the true ‘ceiling’ at $6,000. After such large and sudden moves, a high degree of volatility is to be expected and the coming week will likely throw up some surprises.