Boom goes the blockchain
Bitcoin saw an explosion of growth in terms of its price over the holiday weekend most notably the day after Christmas where spot markets saw a nearly $2,000 increase. This weekend rally caused a massive gap in the CME’s futures chart of nearly $3,000 to appear upon opening today.
This Christmas rally surely negates the ‘Tri-Star’ top we were talking about on Friday as no confirming candle was witnessed today. This move to higher pricing surely puts $30,000 on the table and could be reached sometime in January of 2021. With the end of the year just a few days away I feel it is safe to say that 2020 was indeed the landmark year that Bitcoin had been waiting for and many who shied away from Bitcoin in the past have come to terms with the fact that Bitcoin is here to stay.
After this weekend’s monumental move higher, some traders may be asking “How much further can it climb before we see a correction?” According to the weekly RSI which currently sits at 83.22 is suggesting that there is not much more room to the upside before reaching a point in which it is too overbought for some investors. However, the height in BTC’s weekly RSI came in June 2019 when the rally for that year brought the relative strength index up to 85.74 might be overtaken this time around.
Because when we look at the momentum indicator (MOM) we are already well into uncharted territory. Generally, when this technical indicator is at new highs or lows relative to its historical action it is viewed that a continuation of the current trend is likely. With the weekly MOM currently at 14,095, it has more than doubled compared to the level it reached when the RSI hit its all-time high in June 2019.
A weekly Heikin-Ashi also suggests momentum to the upside is still largely intact and with body sizes now increasing for the fourth week in a row. We now have thirteen winning weekly candles in a row of which only two have had lower wicks. As it appears on a weekly Japanese average chart Bitcoin has only been gaining in its upside momentum since October of this year. October is of course when PayPal gave its announcement that they would soon allow users to hold and exchange Bitcoin in their application.
For all these reasons we could easily see BTC hit $30,000 before a correction occurs, the only thing coming off as ominous is the number “13” regarding its weeks of gains. Traders that took our call should raise stops as proper action dictates but remain long BTC via the January contract (BTC F21).
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