Bitcoin (BTC) price analysis 29 Nov: is the bounce a bull trap?
Bitcoin (BTC) continues to face selling on rallies
Bitcoin took a sharp knock on 26 November along with other risk assets following reports of a new variant of coronavirus, detected in South Africa, that is known to contain more than 30 mutations. This sent bitcoin reeling to its lowest level since early October, dropping more than 20% from its all-time high – the sort of fall which is generally termed as a bear market.
Traders seem to have booked profits at higher levels. That resulted in a 9.5% fall in bitcoin’s assets under management in November to $48.7bn, according to CryptoCompare’s Digital Asset Management Review published on 25 November.
However, Mexico’s third-richest man, Ricardo Salinas Pliego, recently tweeted that the US has been printing money like a third-world country and he asked his followers to buy bitcoin.
The author of the best-selling book Rich Dad Poor Dad, Robert Kiyosaki, also tweeted recently that he is buying more bitcoin to hedge against rising inflation.
Anthony Scaramucci, founder of SkyBridge Capital, said the recent correction in bitcoin was a buying opportunity for investors. He likened bitcoin to Amazon in the year 2000. “I just think this is a risk-off situation right now, bitcoin and other cryptocurrencies being volatile. That’s taking people out of the game. It’s also washing out some of the leverage, which I think sets up a pretty nice first quarter,” Scaramucci said in an interview with CNBC.
Has the correction run its course and will bitcoin go up now? Let’s see what the charts project. Read our BTC price analysis to find out.
Bitcoin price technical analysis: weekly chart
BTC’s price extended its correction for the second successive week and dropped to the 20-week exponential moving average (EMA), But the long tail on the candlestick shows strong buying at the 20-week EMA.
The moving averages are sloping up and the relative strength index (RSI) is in positive territory, indicating advantage to buyers. The bulls will now attempt to push the price above the psychological resistance at $60,000.
If they succeed, the BTC/USD pair could rise to the overhead resistance zone of $64,919.10 to $69,055. The bulls will have to push the price above this zone to indicate the resumption of the uptrend.
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Contrary to this assumption, if the price turns down and breaks below the 20-week EMA, the selling could intensify and the pair could drop to the 50-week simple moving average (SMA).
This is an important level for the bulls to defend because a break below it will increase the risk of a double top formation.
The bitcoin price analysis shows that bulls are buying at the 20-week EMA but they are likely to face stiff resistance at higher levels.
Bitcoin price technical analysis: daily chart
BTC’s price has bounced off the 100-day SMA but the bulls are facing stiff resistance at the 20-day EMA. If the price turns down from the current level, it will suggest that sentiment has turned negative and traders are selling on rallies.
That will increase the prospects of a break below the 100-day SMA. If that happens, the pair could drop to psychological support at $50,000. The bulls are expected to defend this level aggressively but if the bounce fails to rise above the 20-day EMA, the selling could intensify. The pair could then drop to $40,757.
Contrary to this assumption, if bulls drive the price above the 20-day EMA, the pair could challenge the 50-day SMA. A break above this resistance could indicate that the corrective phase may be over. The pair could then rally to $66,358.
Bitcoin: Buy or sell at current levels?
The bitcoin price analysis shows that bulls are aggressively defending the 100-day SMA while bears are selling near the 20-day EMA. A break of either level could result in a strong trending move.
The views and opinions expressed in the article are those of the author and do not constitute trading advice. Trading and investing involve substantial risks and you should do your own research or contact your financial adviser before arriving at a decision.