The crypto news of the day is what the heck happened yesterday in Bitcoin? In a matter of 2 hours, we saw the Bitcoin price go from 6320 to 6080 on Bitmex and then rocket higher to 6580. In the process, stops were cleaned out for both longs and shorts.
For all of 2018, Bitcoin has been a perfect vehicle for swing traders. The market has been playing support and resistance levels perfectly. The play has been to buy Bitcoin around the 6000 level and sell above 7000. Until this pattern changes, it’s what traders and investors need to keep doing. Yesterday’s price action, while crazy and extreme, does still support this strategy.
Why the crazy move in Bitcoin?
There are a number of thoughts as to why Bitcoin made the move that it did. They are technical related and don’t involve a fundamental reason. The first is that there are bots on Bitmex that go hunting for stops. The bot utilizes inside knowledge of where the orders are clustered. If the bot can move the market to where the stops are, it can get filled.
The second is that yesterday was the expiration of the CBOE futures contract. I am an ex-futures trader (now crypto) and know that expiration days can see some crazy moves. This is because it’s the last day to close a position on that futures contract.
Bitcoin trading plan
Being that we are near the bottom of the range, the only trade we see is to be long or neutral with the plan to buy on any dips. One should have limit buys in case the market takes a dive. Orders are now at 5900, 5700, 5400, 5000, and 4800.
In looking at the daily chart and the daily candle above, the market looks bullish. Yesterday’s close was positive and the highs and the lows for the day were greater than the previous day. From the looks of things, our best guess is that the market is heading higher over the next few days.
XRP might lead the way
As we said yesterday, the XRP rally on Tuesday really turned the markets around and gave the bulls some hope. The big XRP price jump on strong volume is indeed bullish and one in which we discuss in greater detail in our XRP Ripple price analysis article today. XRP looks set to consolidate around the .32 mark and this sets the market up for a room to .38 and then .42 to .47 level. Traders entering here could see gains of 40% to 50% if such a move were to occur.
As you can see from the chart above, the .25 level has proven to be very strong support for XRP. XRP has bounced off this level three times now. This signals to us that the lows are in for XRP and the worst is behind for long-suffering XRP HODLers.
Things are certainly looking better in the crypto markets for now. The recent price action is giving hopes to the bulls that the worst is over. While there are many that are still calling for lower prices, the recent price action is signaling that the market is rejecting the recent lows. With just 10 days left in September, let’s see how the market finishes up. A close above 6350 is very important to confirm our bullish bias for the remainder of the year. We will be watching, trading, and updating accordingly.
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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Global Coin Report and/or its affiliates, employees, writers, and subcontractors are cryptocurrency investors and from time to time may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency and read our full disclaimer.
Image courtesy of Pexels
Charts courtesy of Trading View
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