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Bitcoin May Be Poised To See Pullback
On Thursday, Bitcoin (BTC) began to rally massively. After trading under $5,300 for a week as a result of the Bitfinex and Tether news, the cryptocurrency began to push past key levels, somehow reaching $5,800 by Friday. Some fear that this move came to quick, however, meaning that the digital asset market may be poised for a pullback.
Statistical crypto analyst, Awe & Wonder, broke down the reasoning for this belief. He noted that Bitcoin is currently mirroring a historical trend to underperform its logarithmic regression trend line, which sits around 40% higher than the current value of BTC. While there is an opportunity that the asset pushes to and past that trend line, the analyst notes that if historical precedent is followed, BTC will pullback and remain under this key level for the foreseeable future.
#BTC is mirroring this fact. Currently at the upper end of this accumulation range. LTC +1. Traditionally, it stands to reason that the length of an accumulation range is proportionally related to the amount of capital wanting in at favorable prices. 3/ pic.twitter.com/HClsjHcGJg
— Awe & Wonder 🌑 (@Awe_andWonder) May 3, 2019
In another tweet, he notes that Bitcoin’s exponential trend model, similar to the logarithmic regression, is currently showing that there is “downside risk to still be considered,” as, in previous cycles, BTC fell even more dramatically underperformed the aforementioned model. And lastly, he notes that price-based metrics are “signaling caution.”
Even if Awe & Wonder’s statistics aren’t sound, BTC remains clearly under long-term resistance, as noted by trader Panama Crypto. He explains that Bitcoin’s medium-term and long-term charts both show “mighty resistance” at and above $6,400, adding that he expects for the asset to trade between $5,400 and $6,400 for the time being then.
Some aren’t so sure that BTC is ready to slow, however.
According to David Puell, the head of research at Adaptive Capital, Bitcoin’s chart is currently showing an array of bullish signals, both in terms of technical indicators and pure price action.
In a simple chart posted on Friday night, the investor remarked that Bitcoin is currently trading in a broadening ascending wedge, a pattern defined by legendary chartist Bulkowski as a catalyst for bullish continuation. Bitcoin Bravado’s Jack, who noticed this pattern alongside Puell, remarked in his own tweet that such wedges are often never seen in bear markets, and are instead, a reversal pattern that commences a bull run.
But according to Puell, this is far from the only bullish sign. He looks next to volume, which has been on the decline since April 1st’s boom past $5,000. Remarking on Friday’s volume candle, which was relatively massive, he tweets “Ce n’est pas mal!”, which for those not versed in French, means “this is not bad.” Indeed, a notable amount of trading activity signals renewed interest in a market.
Next, the Adaptive Capital partner, who works alongside prominent crypto analyst Murad Mahmudov noted that the lack of resistance and sell orders in the $5,700 to $5,850 range may soon allow Bitcoin to move to that level. And last but not least, Puell points to the fact that the Relative Strength Index (RSI), Chaikin Money Flow (CMF), and On-Balance Volume (OBV) readings, which all measure if an asset is either technically overbought or oversold are currently breaking to the upside.
Title Image Courtesy of Austin Ditel Via Unsplash
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