Even after the recent rally, bitcoin still looks poised to move higher.
The King of the Cryptocurrencies is up 47% since we turned bullish on bitcoin back in mid-February. It hit the $5,200 upside target we wrote about earlier this month. And as traders, this seems like a reasonable spot at which to take some profits off of the table.
That may indeed be the right thing to do. But, if we’re going purely off of technical analysis and the look of the chart, then it looks to me like bitcoin has more upside ahead.
Here’s an updated look at the daily chart of the NYSE Bitcoin Index (NYXBT) – which tracks the action in bitcoin…
Bitcoin hit resistance just above $5,200 earlier this month. But, rather than pulling back from resistance and dropping down to retest the former resistance level as support, the price of bitcoin has simply chopped back and forth in a tight trading range for the past several sessions.
This “consolidating” action, following a sharp spike higher, is a bullish sign that often resolves in another push higher. If bitcoin can clearly break above the $5,300 level, then the next obvious resistance comes in around $6,500.
There’s still plenty of upside left in the bitcoin rally. So, traders may not want to cash in their bets just yet. Rather than taking profits at the current resistance level, traders should consider simply setting a stop just below the 9-day exponential moving average (EMA) line (the squiggly red line on the chart).
The 9-day EMA has provided support for bitcoin since the rally started in mid-February. As long as bitcoin holds above the line (currently about $5,090), then the odds favor more upside ahead.
Traders who want to bet on more upside for bitcoin can do so by setting a tight stop at about $5,000. If bitcoin drops below that level, then sell your position and take your profit. And if bitcoin can pop above resistance and then make a run for the next upside target at $6,500, then you’ll capture an even larger profit.
Best regards and good trading,
How have you been trading bitcoin? Have you taken money off the table, or are you waiting for more upside ahead?
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