Technical analysis

Two scenarios for a bullish reversal on Bitcoin

Julien Moretto – 27 Nov 2019

Panic selling on the cryptocurrency market this week. Bitcoin is losing 10.3% over the last seven days, trading around €6,300 ($7,000) on November 27. The price even approached €6,000 ($6,500) on November 25, with a very negative sentiment about the market, especially on social media. Altcoins are almost all dragged into this dowtrend spiral. Despite a bearish price action these last days, the level between $6,500 and $7,000 is located at a convergence of several technical signals that could lead to a bullish reversal. We reveal two scenarios that could confirm this reversal.

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  • According to CoinGecko, market capitalisation is down sharply this week, to $171 billion from $220 billion last week.
  • The dominance of Bitcoin remains stable at 66.1%.
  • The FED is considering the creation of a cryptocurrency, with US MPs concerned about the loss of the dollar’s supremacy.
  • Tezos (XTZ) and Cosmos (ATOM) are the altcoins that best resist the market dump, losing only 4.4% and 3.6% this week.
  • The predominant feeling on social media is now fear with messages on Twitter announcing a Bitcoin at $3m000 or even $1,000.

We invite you to discover our complete analysis in video (in french and dated from November 26):

Bitcoin (BTC)

Coinhouse recommendation: 
Buy according to your investor’s profile

  • It is often when everyone is thinking about selling that the best buying opportunities are available. A psychology that must, however, be applied carefully. The level of €6,000 ($6,500) is interesting for trying buy entries. It is a historical support that held the Bitcoin price for the most of 2018. We reach this level, being very low on oscillators such as the RSI and the MACD.
  • If the €6,000 ($6,500) support is broken, then it is likely that the price will quickly drop to the next major support at €5,000 ($5,500). A level that corresponds to the Fibonacci retracement 0.786 of the entire 2019 increase. This is the deepest level of retracement that can still justify a bullish reversal and then a longer-term bull market.
  • On the weekly timeframe, the 200-week moving average is also close to the €5,000 ($5,500) price level. The Bitcoin price has never fallen below this 200-week moving average, which has already acted as a support during the December 2018 low of $3,200. It will be the last chance support for buyers. If the price clearly falls below this level, it will be a long-term sell signal on Bitcoin.
  • A few positive elements: we are on the lower level of the Bollinger Bands in the weekly timeframe. The 50-week moving average is about to cross the 100-week moving average: a bullish signal.
  • The first potential scenario that would announce the end of this correction: a slowdown of this bearish trend just above the €6,000 ($6,500) level, with low volatility and volumes. A similar scenario to the one that occured in December 2018 where many buyers were waiting for the $3,000 zone, which was never filled.
  • Second scenario: a bearish capitulation with a final acceleration that pushes the price below $6,200 to reach prices such as $6,000, $5,800 or even $5,500. A price action leading to a phase of “panic selling”, followed by a violent buyback phase that raises the price as fast as it goes down and marks the end of the correction.
  • Depending on your profile, buy entries are possible. If you are a long-term investor and are convinced by the value of Bitcoin, you can buy on the current level of €6,300 ($7,000) in case our first scenario happens. Short-term, it is the €6,700€ ($7,400) resistance that must be break to regain a bullish sentiment.
  • If you would rather speculate, you can wait and place buy orders between €5,000 and €5,500 ($5,500 and $6,000) to hope to have good buy entries if the second scenario happens.

Ethereum (ETH)

Coinhouse recommendation: 
Wait

  • Our sell signal was triggered on Ethereum, as the €145 ($160) bear break occurred.
  • We now recommend to wait and not to buy back Ether until the situation has improved on Bitcoin. The level of €123 to €127 ($135 to $140) is also the 0.786 Fibonacci retracement level of the entire 2019 increase, but is not a good enough signal to buy. If this support breaks, the price of the Ethreum would drop much lower.
  • If the price goes back to the old support that has become resistance, then breaks the €160 ($180) resistance with volumes, it will be a first signal for a bullish reversal on Ethereum. Even if a bullish reversal pattern can occured lower, which is not the case right now.

Litecoin (LTC)

Coinhouse recommendation: 
Wait

  • Difficult week for Litecoin with -17.3%, down to €41 ($45).
  • In the past few weeks, we recommended to wait and not to buy Litecoin, as the price did not show enough signs of a medium-term bullish recovery. This strategy is paying off today because Litecoin is also dropping with Bitcoin.
  • The technical situation on Litecoin is even more bearish than on Bitcoin or Ethereum. Even the 0.786 Fibonacci retracement level that was around $50 has been broken, suggesting that there will be no significant bullish recovery on Litecoin in the short term. Almost all of the 2019 increase has been corrected.
  • To find a first interest in buying Litecoin, the price has to go back above the €56/58 ($62/65) pivot.

Top & flops of the week (top 50 marketcap)


Tops

1- Augur (REP) : +4%
2- Cosmos (ATOM) : +1%
3- Tezos (XTZ) : +0,10%


Flops

1- Huobi Token (HT) : -24,90%
2- DASH : -21,90%
3- NEO : -20,40%

Hot crypto news

  • The FED is considering the creation of a cryptocurrency.
    American MPs are openly concerned about the loss of the supremacy of the dollar.
    This could also be a way to impose the dollar at the center of the cryptoasset market.
    The announcement did not specify whether it was a stablecoin, but it is likely.
  • Monero’s official website has been hacked.
    The attackers took the opportunity to replace the download of the Monero client with a version that steals cryptos from its victims.
    This indicates a relatively sophisticated attack.
  • The French Armies will use Tezos blockchain
    It is the Tezos blockchain that the SIRPA (The French Armies and Gendarmerie’s Information & Public Relations Center), the communication service of the French armies, has chosen to use in the context of an immutable ledger.
    This is the first deployment of operational smart-contracts by a public entity on the Tezos blockchain.

Investors’ attention is drawn to the fact that the content of the articles does not constitute investment or financial advice.
Investing in cryptocurrencies involves a risk of total capital loss.
For more information, please do not hesitate to contact our support department.

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