Bitcoin has closed twice above the 55 Moving Average (MA) (fig. 1) on the daily chart yesterday and has stayed above that line ever since. This is a bullish signal and justifies the current euphoria in the market. Also other significant lines like the MA 21 and MA 100 and the 200 MA as we showed in our last technical analysis.
Historically, this indicator has proven to start rallies more often than not. However, there are some instances where the rallies failed following similar patterns. E.g during the beginning of the last bull run (fig. 2).
Obviously, the mood in the market is very optimistic. There is a lot of FOMO going on which led prices for weeks now higher and higher. Some articles on the price movement that we have written in the last weeks became outdated fastly when we published them as Bitcoin’s price rose quickly higher. All by itself, this is of course very positive news. However, price development has gotten a bit unhealthy lately. The price is rising parabolically (fig. 3) during these last few days. Parabolic price action is fun to ride. However, finding the right exit point(s) is crucial as the pullback is usually as severe as the surge.
If you have not entered the Bitcoin market prior to this recent surge, there is no reason for FOMO now. The price action has been now overall positive for more than a month. Entering now bears the risk of getting seriously burned. The next pullback will come for sure and it is likely to become a major pullback that could even undermine the notion that the bull market has started now. The key level to watch for now is the 6700 – 6800 zone that we outlined in our last analysis. It is possible entry zone. However, if this support breaks the pullback could reach much lower. In fact, “the end of the crypto winter” could prove to be just a bull trap and prices go much lower. But parabolic price advances are hard to predict and it is possible that it continues for days now.