Bitcoin rallied on Monday, rallying up to the $35K level before finding resistance and pulling back to around $30K and eventually settling around $31K on the daily candle. This comes following a raucous end to the weekend in which crypto surged late on Sunday/early Monday in Asia to new highs, only to then give back a lot of the gain during the Europe and US trading sessions. This is an inverted hammer with a long tail and a green body, though it probably looks more bearish than it is because the candle started at the end of the Asian weekend in which crypto was still quite lifted from weekend action. I still think Bitcoin continues upward, at least until the equities fall or the US dollar finds a long-term bottom.
(January 4, 2020 7:30PM EST)
Bitcoin rallied during the Monday session to start the week, reaching a new ATH at $35K before pulling back to as low as the $28K level before finding support, bouncing to the low $30,000s at the close of the candle. Talk about volatility, Bitcoin moved as much as $7,000 today in its greatest range, showing that despite institutional money entering the space which is supposed to diminish volatility, the space is still very new in relative terms and will have a much higher beta than traditional markets and even volatile stocks like Tesla.
Going forward, the trend is up so that's what we have to follow if we want to get profits. Pullbacks are buying opportunities and value for the medium-longer term investment horizons. I think a pullback to $25K or so might make sense eventually, though I won't be trying to time that; the risk isn't worth it. I think the smarter move is to continue to DCA at an interval of your choosing and to save some dry powder for dips like we saw today.
In traditional markets, gold continued its grind upward to $1,945 while equities sold off, falling over 2% on the day away from ATHs. Meanwhile, the US dollar recovered a bit on the day despite its horrible performance in H2 2020, possibly putting some pressure on Bitcoin. As equities continue to hover around ATHs but showing some cracks in the floor, possibly alluding to a late Q1/early Q2 correction, this could have major implications as to the timing and possibly intensity of a Bitcoin and crypto correction as well.
I think the best strategy going forward is to buy on dips, dollar-cost average on a regular basis, and even earn Bitcoin if you can. You simply can't short or even sell this market when all it does is go up over time. Sure, there are short-term fluctuations, but long-term there's no sense in missing out on this ride. This is truly the trade of the decade: if you're not in Bitcoin, chances are you'll be getting much worse returns elsewhere.
Support: Look for support around $25K down to the $20K level, though I think the lower your limit orders the less your chance of them being hit are. This is a seller's market; dips are bought and rallies inspire FOMO buying. Dips will continue to be shallow.
Resistance: Bitcoin's going higher - no sense in trying to fight this trend. Above $30K, look for resistance again every $5K: $35K, 40K, 45K, and then $50K. After that, we'll probably move in $10K increments.
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