Published
4 years ago on
November 28, 2019
Bitcoin (BTC) bulls charged aggressively yesterday and the price is currently trading well above the $7,000 mark. It is no longer a do or die situation for the bulls as they have assumed control for the foreseeable future. We can see the price trading within a falling wedge that may soon lead to further upside. It wouldn’t be surprising to see BTC/USD trade north of $8,000 if it ends up breaking out of this wedge. When the price declined down to the $6,587 mark, a lot of retail bears got overly excited and entered aggressive longs. Many of them were taken aback by yesterday’s rally and many will yet be surprised as the market keeps going up.
The thing about such rallies is that they are quite aggressive in nature and more like pumps. The intent is to shake out the bears as quickly as possible without giving them an opportunity to cut their losses or get out of the market. So, the price trades sideways for a while and the bears start to think it can still fall down to the level they shorted at but what ends up happening instead is that the price keeps on printing one pump after another to the upside. Those who have been trading this market for the past six months should be no stranger to such antics of the market makers and whales. Hoping or wishing has no place in this market or any market for that matter. Therefore it is important to trade what is rather than speculating on what is going to be.
The 4H chart for Bitcoin dominance (BTC.D) shows us how the near term correction has now come to an end. The last time it tested the 200 MA and faced a rejection there, we saw the beginning of a downtrend in Bitcoin dominance (BTC.D) which was a good development for the overall market and we saw altcoins begin to rally. It is still important not to rush through this and wait for a break below the 1.272 fib extension level before entering any altcoin trades.
A continued decline in Bitcoin dominance (BTC.D) would be bullish for the market in general and we would see traders and analyst start talking about a new yearly high once again. Needless to say, it will have the same outcome as that of similar events from the past. Retail traders will go all in on altcoins and get all excited about a new bullish cycle when all it would really be is just a temporary relief rally before the beginning of the next major downtrend. This is why it is important to remain cautious during a bear market and recognize that the long term trend is bearish not bullish.
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