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Chart Of The Day: Bitcoin Ripe For Short-Term Rebound Before Meltdown Continues

By Investing.com (Pinchas Cohen/Investing.com)CryptocurrencyDec 06, 2021 09:44AM ET
www.investing.com/analysis/chart-of-the-day-bitcoin-ripe-for-shortterm-rebound-before-meltdown-continues-200610569
Chart Of The Day: Bitcoin Ripe For Short-Term Rebound Before Meltdown Continues
By Investing.com (Pinchas Cohen/Investing.com)   |  Dec 06, 2021 09:44AM ET
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The Bitcoin meltdown that took on speed this weekend continues today. The selloff of the digital currency has now taken the token below the psychological round $50,000 threshold, a level beneath which it fell on Saturday.

With the price of the cryptocurrency down by more than 3% on Monday, hovering around $48,000, it's clear the move is more than just thin trading because of lower volume on the weekend.

Indeed, there are no known fundamental drivers for this current selloff which came just after the market narrative seemed to focus single-mindedly on whether the number one cryptocurrency by market cap was headed to $100,000.

For anyone searching for some sort of fundamental trigger, it seems investors generally dumped Bitcoin after the news about the Omicron variant roiled markets. But the knee-jerk selloff continued after the initial headlines, demonstrating yet again that Bitcoin is no safe haven and certainly not a store of value.

The token is approaching a 30% decline in just a little over a month, since its record peak in November, putting Bitcoin deep within a bear market.

BTC/USD Daily
BTC/USD Daily

The price extends the neckline penetration of a downsloping H&S top, one where bulls were so weak they couldn't muster a proper right shoulder. Note that the downside breakout of the pattern coincided with a cross below the bottom of a rising channel, possibly the beginning of a falling channel.

The bigger picture is perhaps even bleaker.

BTC/USD Weekly
BTC/USD Weekly

On the weekly chart it looks like the H&S top may be the right top of a much larger double-top in the broader view.

While the 50 WMA provides support, for now, the 100 WMA teams up with the potential neckline for the most extensive pattern Bitcoin has yet to see, which would follow the first extended selloff of the token, that's now lasted three straight weeks, since 2018.

The MACD, a price-based indicator, and the momentum-driven gauges, the ROC and RSI, provided negative divergences when the record price peak in November occurred but was left on its own, having no support from momentum amid weakening relative pricing.

Trading Strategies

Conservative traders should wait for the price to rebound in order to retest the daily H&S neckline and top of the (red) falling channel.

Moderate traders would sell a rally around the critical $50K level near the neckline.

Aggressive traders could buy the dip, before joining the rest of the market with the selloff, provided they are risking money they are willing to lose. A tight trading plan is essential. Here's an example:

Trade Sample – Contrarian Long Position

  • Entry: $47,000
  • Stop-Loss: $46,000
  • Risk: $1,000
  • Target: $50,000
  • Reward: $3,000
  • Risk-Reward Ratio: 1:3

Trade Sample – Short Position Setup

  • Entry: $50,000
  • Stop-Loss: $51,000
  • Risk: $1,000
  • Target: $45,000
  • Reward: $5,000
  • Risk-Reward Ratio: 1:5
Chart Of The Day: Bitcoin Ripe For Short-Term Rebound Before Meltdown Continues
 

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Chart Of The Day: Bitcoin Ripe For Short-Term Rebound Before Meltdown Continues

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Comments (4)
Mohd Izhar Muslim
Mohd Izhar Muslim Dec 07, 2021 2:37AM ET
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that so great! Thank you for the article 👍
Totaltwo Sam
CryptoSam Dec 06, 2021 12:32PM ET
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Whales fearing liquidity about to run dry
roy satterwhite
roy satterwhite Dec 06, 2021 12:12PM ET
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BTFD
Tommy Rommazontz
Tommy Rommazontz Dec 06, 2021 11:50AM ET
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Any other asset more profitable than bitcoin in the past 10 years? Didnt think so. What a dope
Pinchas Cohen
Pinchas Cohen Dec 06, 2021 11:50AM ET
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See my previous post on Bitcoin, when it was above $60K.
 
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