Weekly Review: Shallow Corrections

Bitcoin bulls engineer quick recovery from lows below $7,500

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May 24, 2019 Welcome to the weekly edition of the CoinDesk Markets newsletter! Every Friday we will review our cryptocurrency price predictions posted during the week via CoinDesk Markets Twitter  or our private room on StockTwits, the CoinDesk Dojo.  "Trades You Missed" will feature our favorite trade ideas or technical analysis insights that accomplished impressive gains, where as "Trades We Missed" will feature those that took a turn for the worse. Wins and losses are both part of the trading game, so we hope you will learn how to replicate our successes and minimize losses!   Bitcoin's Pullback to $7,500 Was Short-Lived BTC/USD: Price: $8,000 | MCAP: $142 billion | Maximum Gain: 7% Why we were intrigued:   Bitcoin's quick recovery from last Friday's lows below $6,200 to levels above $8,000 on Sunday had revived the case for a rally to $8,500 (July 2018 high). The follow-through to Sunday's double-digit price gain, however, fizzled out on the following day with cryptocurrency creating a "hanging man" candle.  That pattern indicates the sellers are beginning to test bulls' resolve to keep prices higher and is widely considered an advance warning of a potential bullish-to-bearish trend change, especially if appears after a solid rally, which was the case with BTC. Further, the 14-day relative strength index (RSI) was reporting overbought conditions and other indictors on the short-duration charts were producing lower highs as opposed to higher highs on price.  As a result, on May 21, our analyst discussed the possibility of BTC witnessing a healthy correction to the psychological support of $7,000.  The analysis could be considered a partial success as prices hit a low of $7,468 on Thursday, before rising back to $8,000 earlier today. It was a slop drip pullback in a sense that BTC took four days to fall from $8,000 to $7,468 and reversed the decline in just 24 hours.  The quick recovery is telling a tale of strong "buy the dip" mentality. Also, with the $500 recovery seen in the last 24 hours, BTC has violated the bearish lower highs and lower lows pattern, as per the hourly chart. Further, the cryptocurrency witnessed a flag breakout on the hourly chart a few hours ago.  So, prices could rise toward the recent high of $8,390 over the weekend. It is worth noting that BTC has had a tough time holding onto gains above 8,300 in recent days and another failure could galvanize sellers.   The Trade   The Result BCH Traps Sellers With Consolidation BSV/USD: Price $100 | MCAP $1.77 billion | Maximum Loss: Nil Why we were intrigued   Bitcoin Satoshi Vision or Bitcoin SV (BSV) surged over 200 percent on May 21 partly due to the news that Craig Wright –  a bitcoin SV proponent – has registered copyright claims on the Bitcoin Whitepaper and original code and promised to revert the copyright to the Bitcoin Association. BSV/USD clocked a high of $135 on Bitfinex on May 21 and retreated to $106 before creating a minor rising channel on the hourly chart on the following day.  The cryptocurrency was looking extremely overbought on May 22, as per widely followed technical indicators like the relative strength index. Also, the price pump due to Wright news was widely expected to be short-lived.  As a result, our analyst was called a sharp pullback on potential rising channel breakdown.  The channel was indeed breached to the lower side with prices falling below $100 on May 22. So far, however, the expected pullback to $90 has not materialized. The cryptocurrency has been largely restricted to a narrow range of $96 to $100. Bitcoin’s recovery from lows below $7,500 to $8,000 seen in the last 24 hours likely restricted the downside in BSV at $96.00. As of writing, the cryptocurrency is trading at $100 – the channel breakdown price (sell trigger). So, while the bearish view has failed, traders who may have gone short aren't losing money. That said, a drop to $90.00 could be seen over the weekend if the newly established trading range is breached to the downside.  A range breakout, however, could pave way for retest of $130. After all, the recent consolidation has allowed the RSI to realign in a more bull-friendly manner.  The Trade The Result   We're excited to announce the launch of the CoinDesk Dojo, a premium subscription part of StockTwits' recently announced Premium Rooms product. Ask the analysts—Omkar, Sam and Seb—questions about charts and talk with other traders looking to profit off the volatility of the crypto markets.  Create an account on StockTwits and then subscribe! Subscribe Here   Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments. Copyright © 2018 CoinDesk, All rights reserved.  Our mailing address is:  250 Park Avenue South New York, NY, 10003, US  Want to change how you receive these emails? 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