Bitcoin price analysis for November 9-15: the charts point to a possible correction in the short-term
Bitcoin is overbought in the short-term, which could result in a minor correction or consolidation in the next few days
The uncertainty of the US Presidential elections are largely over after media houses confirmed that Joe Biden has won. This would clear the path for negotiations on the second stimulus package to resume.
The huge amount of fiscal and monetary stimulus announced in the past few months to counter the slowdown caused due to the coronavirus pandemic is likely to weaken the US dollar further.
In an interview with CNBC, famous investor Bill Miller said:
“I think every major bank, every major investment bank, every major high net worth firm is going to eventually have some exposure to bitcoin or what’s like it.”
If institutional investors allocate even a small percentage of funds into Bitcoin, the price could skyrocket. However, the inflow from institutions may not happen overnight. Hence, investors should avoid chasing Bitcoin’s price higher and wait for the right opportunity to invest.
Let’s do the Bitcoin price trend analysis of the weekly chart to determine whether the uptrend could continue or whether there is a minor correction around the corner.
Bitcoin price technical analysis: weekly chart
Bitcoin did not stall at $14,000 as anticipated in the previous analysis. It surged 12.44 per cent last week to end at $15,485.60.
This rally has pushed the RSI deeper into the overbought territory, which suggests that the BTC/USD pair is vulnerable to a correction or minor consolidation in the next few weeks.
Sometimes, when the momentum is strong, the RSI could become extremely overbought as seen during the December 2017 bull phase when it had hit 94 levels.
Such a move suggests extreme levels of greed among traders as they fear missing out on an opportunity to buy. When the last of the bulls has purchased, the market turns around sharply and plummets.
Therefore, traders should exercise caution and not get sucked into a blow-off top without knowing where to exit.
However, if the pair enters a minor correction from the current levels, it is likely to find support at $14,000 because the bulls may buy the dips. This positive view will be negated if the Bitcoin price plunges below $14,000.
The Bitcoin price weekly analysis shows that the bulls are in control but the overbought levels on the RSI suggest caution. Let’s do the BTC price analysis of the daily chart to spot the critical support and resistance levels.
What is your sentiment on BTC/USD?
Bitcoin price technical analysis: daily chart
The corrections during strong uptrends generally last between one to three days. On November 7, Bitcoin corrected sharply to an intraday low of $14,330.90 and this eased the RSI from deeply overbought levels.
The bulls used this dip to buy and the pair recovered most of the lost ground on November 8. Both moving averages are sloping up and the RSI is in the overbought zone, which suggests that the bulls are in control.
However, the bears are likely to defend the $16,000 level aggressively. If the price turns down from this resistance, the pair could remain range-bound for a few days.
The first sign of weakness will be a break below the 20-day EMA. Such a move will suggest that traders are not confident that the rally will continue, hence are not buying the dips.
Conversely, if the bulls drive the price above $16,000, the pair could resume its uptrend and rally to $17,200.
How to trade Bitcoin this week
If bulls can push the price above $16,000 and sustain it for about eight hours, aggressive traders could consider a long position with a close stop-loss. The target objective on the upside is $17,200.
However, the overbought readings on the RSI warrant caution. Hence, swing traders may book profits on the remaining 20 per cent position and wait for the price to rebound off the 20-day EMA before buying again.
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