After what felt like an interminable consolidation period for us all, bulls finally pushed bears out of the resistance/gap zone last night, triggering the start of a short squeeze – a rally in which short sellers' stoplosses are triggered, causing a very aggressive move, something we've been thinking could happen for a while given the record short interest. The result was a sight to behold.
Let's take a look at the current situation:
This move finally fully confirms the recent bottom. The overnight rally was halted by resistance from the 50 and 100 day moving averages (green arrow) which coincided around 6930, and are now the next hurdles.
It's possible we'll see a retrace to retest the top of the recently departed congestion zone from above, but give the momentum we saw overnight I wouldn't be surprised to see bulls push straight through, perhaps after some consolidation at the moving averages.
Short interest remains high (see the indicator at the top of the chart showing the number of short contracts on Bitfinex), so I suspect that if they manage to probe $7000, some further short stoplosses will be triggered and we'll likely see another impulse move higher.
Our initial target for this move is the zone $7650-$7900, which is the area between the former downtrend and the 200 day moving average (red).
No additional comments here, just showing the move in context of the resistance bands we've been battling and the moving averages which put the brakes on the rally last night.
ETH is still struggling to get back above resistance (green) and has yet to tackle the gap in yellow, so I'm expecting it to underperform for a while. Eventually though if all goes to plan with BTC, our first target will be the 50 day moving average at 380, with a second target at $450-460.
XRP is clear of resistance and the downtrend that's been holding it underwater. On a further rally from BTC I'm expecting it to move swiftly to the 50 day moving average around $0.40, and then all being well on to our $0.45 target. There remains very little resistance in this area, so this remains my favourite chart of the moment.
Litecoin's looking great for a run straight up to the 50 day moving average around $70 and then on to our $74 target, BTC permitting.
Like ETH, BCH still has a gap to overcome (yellow). If it manages this (which another impulse move higher from BTC would probably assist with), first target is $600, with the 50 day moving average at around $669 being next.
BCB Group has no position or opinion on the price of Bitcoin or any other cryptocurrency and this article should not be construed as analysis of or advice regarding the current or future market price of Bitcoin or any other cryptocurrency. No analysis of the price movements of BTC or any other cryptocurrency or any other asset provided by BCB Group should be construed as an invitation or inducement to buy, sell or otherwise to trade BTC or any other cryptocurrency.
Strategy and Execution Partner
Jon is BCB’s head strategist, with an emphasis on market intelligence. An expert in behavioural science and highly experienced chartist, Jon has been providing BCB’s clients with crypto and macro technical analysis since 2017, and has quickly gained a reputation for accuracy after correctly calling the December 2017 top and August 2018 bottom.
Jon is also MD of British music production company Poseidon. He began studying technical analysis in 2000 due to its overlap with behavioural economics – much used in Poseidon's international marketing work, which has seen the company achieve three iTunes US number one albums among other notable successes.