Before continuing, I just want to state that what you are about to read is what I wrote on Saturday. The only thing I have changed is the diagram, which captures the price of Bitcoin a few minutes ago. I see no reason to change my view.
Investors and traders have not seen a time more confusing and volatile than in the last two weeks. I have often joked that all it takes to move cryptocurrencies is for Vitalik Buterin to say he has changed his coffee brand and prices will fall. We all know that the ETF rejection has caused the latest price movements. Having said that, where is the Bitcoin price going? In my blog piece, “Bitcoin – Bearish Sentiment, Bullish Feelings”, I said we need to watch the clouds to see, which direction the price of Bitcoin takes; it has finally taken a trend direction – a bearish one.
There are two key variables to saying this. First, the candles have come out of the cloud at the bottom. This means that the trend is in a downward direction. Second, the tenkan-sen (the blue line) has crossed the kijun-sen (black line) in the downward direction. A third point can be made by looking at the cloud itself. Notice that the red line also called Senkou span B is above the green line – Senkou span A – then the trend is bearish. Ichimoku purists may insist that both the kijun and tenkan-sen must also be under the cloud to confirm the bearish trend. Nevertheless, the more aggressive traders may believe it is worth taking the risk despite not all variables aligning.
We must also remember that this is the weekend and as such many institutions as well as individuals are bound to use trading bots. Just as I concluded in another of my previous blogs, a combination of trading bots and animal spirits bring about the level of uncertainty and volatility we are witnessing. Expert or not, we do not really what the bitcoin price will do any minute now. But just in case you are wondering, your guess is as good as mine.
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