The Bitcoin Bubble Has Popped. How To Trade It Now

The Bitcoin US Dollar FX Spot Rate (BTC-USD) had been trading higher due to a golden cross that formed a year ago.

BTC traded up from $8.63 on May 25, 2020 to its all-time intraday high of $64,899.97 set on April 14, 2021. Since this high, BTC dropped to as low as $30,000.00 on May 19.

This extreme volatility was consolidated last week. The trading range on May 19 was between $30,000.00 and $43,606.75. Within this trading range is the 200-day simple moving average at $40,124.80. My semiannual pivot is $35,643 with a quarterly pivot at $40.283. This range has been a trade since May 19.

The weekly chart was downgraded to neutral during the week of May 2 when its 12-week slow stochastic reading fell below 80.00. Stochastics scale from 00.00 to 100.00 and a reading above 80.00 is overbought, while a reading below 20.00 is oversold.

The weekly chart has been negative since May 16 with weekly closes below its five-week modified moving average which is now $49,500.

The Daily Chart For Bitcoin

 Courtesy of Refinitiv XENITH

Bitcoin had been above a golden cross since it began trading a year ago. My semiannual pivot at $35,643 was a magnet between January 6 and February 3. Holding the 50-day simple moving average at $29,252.24 on January 27 proved to be buying opportunity.

The 50-day SMA held again at $51,278.28 on March 26 as another buying opportunity. When the 50-day SMA failed to hold at $56,252.44 on April 18, the daily chart suggested that strength should be used to book profits.

The sell zone within which to book profits began with its 50-day SMA at $56,973.09 on April 30. In May, my monthly risky level is $59,646 and the May high has been $59.598.22.

Once the 50-day SMA failed to hold at $56,788.97 on May 12, the downside risk was to the 200-day SMA now at $39,894.58, which has been a magnet recently. My semiannual pivot at $35,643 has also been a magnet. The May low is $30,000 set on May 19. The annual value level is $18,892.

The Weekly Chart For Bitcoin

Courtesy of Refinitiv XENITH

The weekly chart for bitcoin is negative. It is below its five-week modified moving average at $49,470. BTC has a 12x3x3 weekly slow stochastic reading declining at 53.58. Its 200-week simple moving average is rising at $12,569.

With the bubble popped, bitcoin will be extremely volatile. Use the above moving averages and my value levels, pivots, and risky levels to capture the choppy trading patterns for bitcoin.

Get timely bitcoin and other cryptocurrency news delivered to your inbox each Saturday with Crypto Confidential. Sign up here.

Most Related Links :
Business News Governmental News Finance News

Need Your Help Today. Your $1 can change life.

[charitable_donation_form campaign_id=57167]

Source link

Back to top button