Earlier, I wrote a fundamental piece about the recent moves in the forex, bond and equity markets, and mentioned that something doesn’t quite add up. Well, lucky for me, I am first and foremost a technical trader/analyst rather than a fundamental one. It doesn’t really matter what I or you think ‘should’ happen. As long as price says to me it wants to go up then I am bullish, and if it is telling me that it wants to go down, I am bearish.
Of course, I and you can have longer-term views on the direction of prices, but this shouldn’t cloud our judgment when it comes down to short-term trading. But sometimes when things don’t line up, it may be best to stay on the sidelines. If you have to trade, then take things from one level to the next and move on, or look for possible opportunities in the FX crosses and something very different like bitcoin.
Bitcoin has managed to bounce back in the past few days after declining sharply. In some exchanges, it rose to the $10,000 hurdle before easing back a little on profit-taking. Recent price action has been somewhat bullish. As the one hour chart of CME Bitcoin futures show, it has been putting in a series of higher highs and higher lows on the lower time frames. On the daily, it has shown willingness to hold above the 200-day average. We have seen some volume coming into bitcoin as it traded around the 200-day average.
The 1-hour volume weighted average price (VWAP) is now trending higher. Bitcoin has broken above a key short-term resistance zone in the $9,000-$9,250 range. This area has since turned into a bit of support. For as long as price holds above this area then the short-term bias would remain bullish. However, if it goes back below this $9,000-$9,250 range then one would have to strongly consider the bearish scenario given the recent declines on the higher time frames. The next area of resistance is between $9,800 and $10,100. This area was previously support. Further resistance comes in at $10,850, followed by $11,750.