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Chart Of The Day: Bitcoin Has Rallied, But Don't Buy The Dip Just Yet

By Investing.com (Pinchas Cohen/Investing.com)CryptocurrencySep 22, 2021 09:32AM ET
www.investing.com/analysis/chart-of-the-day-bitcoin-has-rallied-but-dont-buy-the-dip-just-yet-200602704
Chart Of The Day: Bitcoin Has Rallied, But Don't Buy The Dip Just Yet
By Investing.com (Pinchas Cohen/Investing.com)   |  Sep 22, 2021 09:32AM ET
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After plunging more than 15% during the past three days, Bitcoin has now rebounded. So is the selloff over? For a variety of reasons, we don't think so.

The cryptocurrency joined other risk assets such as stocks in a sharp selloff as China’s giant real estate group Evergrande (HK:3333) looked to be on the verge of defaulting. At the same time, gold, a classic safe haven asset, gained 1.5%. In our view, this puts a damper on the claim by many that Bitcoin could be a stand-in for the yellow metal during periods of risk-off.

From a risk perspective, now that China’s PBoC has started pumping liquidly into the country's financial system to avoid market turmoil after a holiday, investors might be encouraged that the local regulators wouldn’t allow Evergrande to become another Lehman Brothers. That's not a forgone conclusion, since recently China has been desperate to counter excessive speculation in various markets, and the Evergrande debacle is blocking its way.

It remains uncertain still whether Beijing will ultimately let the company—its second largest real estate developer by revenue—collapse, in order to send a clear message to other highly leveraged local companies. As such, an additional boost to market sentiment today, and risk assets overall, was Evergrande’s private negotiations with bondholders to pay the September coupon, keeping a default at arm’s length.

On Wednesday, at time of writing, Bitcoin is up 3.8%, moving higher in tandem with regional stocks and US futures. The cryptocurrency found support by the $40,000 key level.

So, why are we not recommending investors buy on this dip? The technical picture is worth a thousand words.

BTC/USD Daily
BTC/USD Daily

At this point, the digital token's rise is considered nothing more than a return move to retest a completed H&S top, presumably fueled by short-covering.

Moreover, if the price continues to fall below $28,890, it will have established a long-term downtrend.

BTC/USD Weekly
BTC/USD Weekly

Trading Strategies – Short Position Setup

Conservative traders should wait for the price to retest the neckline’s integrity, followed by selling that would push the price below $40,000 on a closing basis before going short.

Moderate traders would also wait on a short, with resistance of the H&S top on a closing basis at the very least. Right now, the price we're seeing is only on an intraday basis.

Aggressive traders could short right now, provided they accept the higher risk proportionate to the higher reward that goes along with a move before the rest of the market.

Trade Sample

  • Entry: $42,400
  • Stop-Loss: $43,400
  • Risk: $1,000
  • Target: $37,400
  • Reward: $5,000
  • Risk:Reward Ratio: 1:5
Chart Of The Day: Bitcoin Has Rallied, But Don't Buy The Dip Just Yet
 

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Chart Of The Day: Bitcoin Has Rallied, But Don't Buy The Dip Just Yet

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Comments (7)
Dom Cobb
Dom Cobb Oct 01, 2021 12:18PM ET
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hahahahaha
Kyaw Oo Kyaw Oo
Kyaw Oo Kyaw Oo Sep 23, 2021 11:54AM ET
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$10
john jordan
john jordan Sep 23, 2021 9:32AM ET
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pinchas selling...time to buy.
Filippo Bulgarini d Elci
Filippo Bulgarini d Elci Sep 22, 2021 1:57PM ET
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Lok are u stupid?! Do u really think Bitcoin could go below 29k?! Bitcoin most probably won't see ever again 30k, even with a bear market, considering we're definitely going to approach 100k before eoy...
Goran Kovač
Goran Kovač Sep 22, 2021 1:57PM ET
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I love people who are perma bullish for Btc without any real reason,0 technical or fundamental knowledge but btc will go to 100k till end of the year, last time i heard this it crashed bellow 30k.
Filippo Bulgarini d Elci
Filippo Bulgarini d Elci Sep 22, 2021 1:57PM ET
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Make a bet. But make sure u'll pay it. Be a man.
Dom Cobb
Dom Cobb Sep 22, 2021 12:16PM ET
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lol hope you had fun losing that 1000 bucks
Pinchas Cohen
Pinchas Cohen Sep 22, 2021 12:16PM ET
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lol hope you don't trade because you obviously have the wrong expectations.
Dom Cobb
Dom Cobb Sep 22, 2021 12:16PM ET
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Pinchas Cohen  now how did you arrive at that conclusion? Would you like to share your 'analysis' please?
Mohd Izhar Muslim
Mohd Izhar Muslim Sep 22, 2021 11:07AM ET
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sounds greatly
Pinchas Cohen
Pinchas Cohen Sep 22, 2021 11:07AM ET
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Thanks, Mohd!
robbie rama
robbie rama Sep 22, 2021 9:23AM ET
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excellent..godbless 🍔🤑🍷🙏
Pinchas Cohen
Pinchas Cohen Sep 22, 2021 9:23AM ET
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Thank you, Robbie!
 
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