Bitcoin has been acting very strong in recent weeks, and this weekend, we already speculated on a likely new all-time price high for the week. Despite a slight pull-back yesterday, the buying pressure, helped by strong fundamental and technical factors alike, never eased.
Today, the most valuable coin surged past the $5000 level and never looked back, leaving investors and traders puzzled about the prospects of the current rally. Fundamentally speaking, everything favors Bitcoin now; analysts and investors widely favor the coin compared to altcoins, the hard fork fears have eased considerably and despite the bubble-talk, adoption is still on track. What does technical analysis tell us?
The Long-Term Setup
The technical picture is more interesting, as these explosive rallies are more driven by emotions than purely fundamentals. First looking at the long-term picture, BTC still has ways to go before reaching the overbought readings that recently led to deep, structural corrections. After the Chinese ICO-ban, the segment outright crashed and Bitcoin hit $3000, for a 40% correction.
The Short-Term Picture
BTC/USD 4-Hour Chart Analysis (Bitstamp Prices)
The short-term momentum readings were already slightly overbought before the break-out, and a brief correction is very likely in the coming days. That said, given the favorable long-term setup we expect the move to continue with a likely test of the $6000 level.
Once again, this is not the best time to buy Bitcoin that is after a deep correction, but the trend is expected to remain intact and further gains are likely. Remember to always control risk and position sizes especially when trading with leverage.
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