Bitcoin price analysis for November 16-22: the coin could drop to $15,000 in the next few days
Bitcoin remains overbought, pointing to a possible consolidation or correction in the near future
Billionaire Stanley Druckenmiller revealed in an interview with CNBC that, along with gold, he also owns Bitcoin. He believes that “if the gold bet works, the bitcoin bet will probably work better because it’s thinner, more illiquid and has a lot more beta to it.”
Galaxy Digital has seen a surge in trading volumes in its over-the-counter-trading desk. This shows that institutional traders are buying Bitcoin to hedge their portfolio against the incessant money printing by the central banks. The company expects the inflow to continue even in 2021.
Bitcoin’s price rally in 2020 has been led by institutional money, unlike the 2017 bull market, which was mainly driven by the retail crowd. Hence, traders should not be in a rush to call a top because every bull phase witnesses period corrections but usually only ends after a frenzy among retail traders.
Let’s do the Bitcoin price trend analysis of the weekly chart to determine the path of the least resistance.
Bitcoin price technical analysis: weekly chart
Bitcoin extended its up-move by 3.16 per cent last week to end at $15,975.45. This was the sixth consecutive weekly candle in the green, which shows that the momentum favours the bulls.
Both moving averages are sloping up and the RSI is in the overbought territory. This suggests that the trend is up and the sentiment is positive.
However, in the past six weeks, the BTC/USD pair has rallied from a low of $10,522 to a high of $16,498.95, a 56.80 per cent rally.
After such a sharp up-move, the pair may enter a few weeks of consolidation or correction and form a higher floor near the $14,000 mark. If that happens, it will be healthy because the weaker hands get shaken out and new investors enter.
The new higher base gives a platform to launch the next leg of the uptrend that may carry the price to all-time highs. The possible levels that may attract fresh buying are $14,000 and then 20-week EMA.
Contrary to this assumption, if the uptrend continues without a break, then Bitcoin’s price may enter a blow-off top, which usually ends with a sharp fall.
The Bitcoin price weekly analysis shows that the bulls are in command and the path of least resistance is to the upside. However, the overbought levels on the RSI suggest caution.
Let’s do the BTC price analysis of the daily chart to see if it has formed any topping pattern?
What is your sentiment on BTC/USD?
Bitcoin price technical analysis: daily chart
The daily chart shows that the current leg of the rally has been so strong that the price has not even dipped to the 20-day EMA. However, the RSI is forming a bearish divergence, which suggests that the momentum has weakened.
If the bears pull the price down to the 20-day EMA, the bulls may buy the dip as it could offer a low-risk trading opportunity. A strong bounce will suggest that the demand remains strong and the bulls will again try to push the price to $17,200.
On the other hand, if the bears sink the price below the 20-day EMA, it will suggest that traders are booking profits and are not hurrying to buy on dips as they expect a deeper correction.
The critical support to watch on the downside is $14,000. A break below this level could signal an end to the uptrend but a bounce off it will signal strength.
How to trade Bitcoin this week
The trade suggested in the previous analysis for the aggressive traders did not reach its target objective of $17,200 but there was enough opportunity to close the position at a marginal profit.
The short-term traders can continue to look for buying opportunities as long as the price remains above the 20-day EMA. However, swing traders may remain on the sidelines and wait for a correction to make an entry again.
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