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Back in 2015, JPMorgan CEO Jamie Dimon had said that people trading in digital currencies such as Bitcoin were wasting their time. Notwithstanding, the lucky few who wasted their time back then would be sitting on more than 900 percent returns. What a fantastic way to waste time.
Fast forward two years and Dimon has intensified his criticism of Bitcoin, calling it “a fraud” and a bubble “worse than tulip bulbs”. Nevertheless, he doesn’t want to short Bitcoin either, because he is not sure how far the bubble will expand.
Let’s study the charts and try to forecast whether we should buy this correction or stay out of it.BTC/USD
Bitcoin has extended its correction and is currently at the 50-day simple moving average (SMA), which is a crucial support. A break and close below this level is likely to exacerbate selling, which can sink the digital currency to $3363, which is a 50 percent Fibonacci retracement level of the rally from $1752 to $4975.
However, the RSI will enter oversold territory if Bitcoin falls sharply below the 50-day SMA. Three previous oversold readings on the RSI have proven to be an excellent buying opportunity. Hence, it can be risky to short bitcoin at the current levels.
On the other hand, if Bitcoin bounces from the 50-day SMA, it will face resistance at the downtrend line. We shall turn bullish only after Bitcoin stops falling and breaks out of the downtrend line.
At current levels, we should remain neutral on the cryptocurrency, as we don’t find any good setups, either to go long or short.ETH/USD
We were correct in avoiding a trade on Ethereum in our previous analysis. A short trade would have hit our stop loss above $310 and...