You may have forgot about them, but it seems the bitcoin bulls still have some stamina in them. After the price of bitcoin has been gradually declining for almost a month and a retest of the December low seemed likely, the bulls took things into their hands (well, hoofs) again. Following a few days of dreadfully low volatility, bitcoin shot up for 10%. Simultaneously, litecoin recorded a pretty decent 40% rise while ethereum bagged a nice 20%.
I must admit that in my previous bitcoin assessment, I was a bit sceptical about any immediate bullish price action. However, I did note that we were sitting on daily RSI support and that we faced a very ugly future in case we break bellow. So, all in all, I’m glad my bleak predictions are at least postponed. Luckily, I managed to close my shorts in time and even entered a small long.
All this being said, we’re still in the macro downtrend and I didn’t – and still don’t – dare to enter with size. Nevertheless, I strongly suspect the bitcoin bulls still have some fuel, as explained below.
Daily time frame
Monitoring the daily RSI levels seems to be a pretty reliable strategy. It gave us info that we were at important support level.
Past price action also gave us pretty discernible resistance at around $3,700. I followed my own advice from the previous update and took this as a target in case we break upward.
As things stand, I am waiting for a nice re-entry. I expect a retrace to $3,570 (upper 4h Ichimoku cloud boundary, in confluence with the 4h 200 day MA). It is possible it could go lower towards $3,480 (previous resistance, in confluence with the 61% fib level of this run), but that would be very shady territory. Price needs to reverse there at all costs, otherwise this was but a stop-run before new lows.
Anyway, bitcoin bulls will most likely go for the major resistance, the $3,880 channel resistance. When we arrive there, the market will be probably overflowing with excitement and optimism. Be cautious and try to refrain from opening long positions below resistance, at least not without a well placed stop-loss.
Bullish Heikin Ashi on bitcoin
To assess the macro picture, I often turn to 1-day and 3-day Heikin Ashi candles. Heikin Ashi candles are a great and powerful tool to determine the trend of the market. Their structure is somewhat complicated so let’s keep things simple. Only when Heikin Ashi candles start turning green can we start thinking of safely longing bitcoin.
Well, both the 1-day as well as 3-day Heikin Ashi candles turned green. I’ll take this as a pretty reliable signal that a new uptrend has just started.
Altcoin market: decision time!
A break of the horizontal support- turned-resistance area in the altcoin market cap is a fairly bullish sign, at least as long as we manage to stay above it. Breaking below that level again will be a bad omen for both the altcoin as well as bitcoin bulls.
More importantly, the altcoin market cap is also floating around the diagonal resistance area which has been keeping the prices down since since the last summer. In fact, if you inhale lots of hopium one could even say this resistance was just broken. For the more cautious ones, a convincing break upward is still needed to confirm this. A breakout out of the RSI triangle is what I am looking for. If and when it happens, this will send a strong signal that we need to take this bullish momentum very seriously.
All in all, it all depends on volume. The next few days will need a significant amount of buy volume to keep the bears at bay. However, a decisive break out of the wedge could signal a serious boost of crypto bulls confidence. In that case I can even imagine bitcoin bulls testing the 5K area. But, as I said, situation is still very precarious and nothing is decided. The time is not yet ripe to mortgage your house to buy altcoins.
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