Bitcoin prediction this week: the coin is getting ready for a large move
Is this a good time to buy or can the price dip further?
Bitcoin has risen close to 100 per cent in 2019. While this beats the performance of all the other popular asset classes by a huge margin, it is a disappointment according to Bitcoin’s own high standards. As the crypto markets mature, the returns in the next decade are likely to be subdued compared to the 8.9 million per cent gain seen in the past decade.
Mike Novogratz, co-founder of cryptocurrency merchant bank Galaxy Digital, has a modest target for Bitcoin in 2020. He anticipates the leading digital currency to close the next year above $12,000. However, with the upcoming Bitcoin halving in May 2020, we anticipate the price to rise above $14,000 during the year.
So, is this a good time to buy or can the price dip further? Let’s analyse the charts to find out.
Bitcoin price prediction chart: weekly
Bitcoin is trading inside a falling wedge, which is a bullish setup. If the price breaks out to the upside, it is likely to start a new uptrend. On the other hand, if the price breaks down of the wedge, it will be a huge negative because failure of a bullish setup is a bearish sign.
For the past five weeks, the price has stuck between $7,853.95 and $6,408.10. This shows a balance between the bulls and the bears. Usually, such a period of consolidation results in a trending move. However, it is difficult to predict the direction of the breakout. Hence, traders should wait for the price to make a decisive move out of the range before initiating long positions.
The longer the time spent inside the range, the stronger will be the eventual breakout or breakdown from it. If the bulls can push the price above $7,853.95, it will indicate accumulation in the current range. Though the minimum target objective of such a breakout is $9,299.9, we anticipate the momentum to easily break above it and head towards $12,000.
BTC to USD chart: daily
Though the bulls scaled above the 20-day EMA on December 22, they could not break above the 50-day SMA. Similarly, on December 29, the bears again thwarted the attempt by the bulls to scale above the 50-day SMA. However, the positive sign is that the bulls have not allowed the price to slip below the 20-day EMA.
A breakout of the 50-day SMA can carry the price to $7,853.95, which is likely to act as a stiff resistance. If the price turns down from this level, the BTC to USD pair might extend its stay inside the range for a few more days. The flat 20-day EMA and the RSI close to the midpoint also suggest a range-bound action.
Conversely, if the bears defend the overhead resistance levels and sink the price below the immediate support at $7,000, a decline to $6,408.10 is possible. A breakdown of this level will be a huge negative.
Bitcoin price this week: how to trade it
As Bitcoin has been trading in a tight range, we do not find any trading opportunities at the current levels. The traders can wait for the price to breakout and close (UTC time) above $7,853.95 before buying 50 per cent of the desired allocation.
We are suggesting to buy only partial position because the downtrend line, close to $8,600, might act as a stiff resistance. If bulls can scale above the downtrend line, the remaining position can be added. The initial stops can be placed at $6,400, which can be trailed higher later.
FURTHER READING: Bitcoin halving: could it reach $170K per coin?
FURTHER READING: Bitcoin price prediction 2020