Bitcoin is setting up for a bounce, and maybe a significant intermediate-term rally phase.
We last traded the King of Cryptocurrencies back in November. At that time, bitcoin wasn’t setup for a sustainable, multi-week rally. But, it did appear oversold enough to generate a short-term bounce – one that could be large enough to justify a trade.
We liked the idea of buying bitcoin near support at $85,000 and riding it for a bounce back up towards $95,000 or so. But, we warned readers not to overstay in the trade. Bitcoin had farther to fall before it hit an intermediate-term bottom.
It took only a few days to get the bounce we were looking for. Bitcoin rallied about 12% in two weeks. We advised readers to take the gains and move to the sidelines – where we would wait for a better setup.
We’re getting that “better setup” right now. Take a look at this chart…
Over the weekend, bitcoin traded as low as $74,600 before bouncing back to the current price near $77,500.
The momentum indicators at the bottom of the chart are in extremely oversold territory – which should lead to at least a short-term bounce. More important, though, for the intermediate-term is the indicators are now showing positive divergence. In other words, as the price of bitcoin has fallen below the November low the momentum indicators are higher than where they were in November.
This sort of “positive divergence” indicates the momentum behind the decline is losing strength. It’s often an early warning sign of an impending rally.
There are no guarantees, of course. It’s possible bitcoin could slice through support at $75,000 and head even lower. But, for traders who have been patiently waiting to buy bitcoin for something longer than a quick, short-term trade, buying it at the current level is the best chance you’ve had in almost one year.
It is certainly better to be buying the King of Cryptocurrencies today than it was in December. So, if you’ve been looking for chance to get into bitcoin, then now is your chance to do so.
Best regards and good trading,
Jeff Clark
Editor, Market Minute
Free Trading Resources
Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career – at zero cost to you. Just go here to check it out.