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After the most anticipated rally in the history of the cryptocurrency, the price of Bitcoin has been moving sideways for the past few days after it failed to break the $20,000 price level. Investors in this hot cryptocurrency have been waiting for a long time to witness this rally to come.
Bitcoin reached $20,000 for the first time in the late 2017 before it suffered a huge fall to $3000. It began to rise in early 2019 before it finally got to the $19,800 level in late November, 2020.
After several attempts to break the $20, 000 level, the price of Bitcoin started moving in a sideway movement, between $19,800 and $17,000 price level. The strength of the bulls is getting weak as the bears set to gain more strength from this critical level.
The bulls failure to get the price back up to $19,800 level in the next few days will see Bitcoin suffer a crash to $16,000 and then to $14,000 price level. The bear looks to be gathering momentum to push the price down from here.
Technically, the volume of the bulls have reduced in the last few days and the volume of sellers tend to increase as more data develops to unfold the next movement on this cryptocurrency.
The 50 EMA and the 200 EMA plotted on the chart are still pointing to the up side but price is pausing at the critical resistance area. A strong sell at the price level could see the 50 EMA take a dive and the 200 EMA could be used as a support area.
Fundamentally, the wide acceptance of the digital currency could help boost the price upward but on the other hand, investors are waiting for more regulations in the cryptocurrency market before putting more money.
Bitcoin correlates well with other cryptocurrencies, most importantly, Ethereum. Ethereum has been trading between $600 and $500 and it’s currently trading at $565. Ethereum reached its all time highest price, $1400, in early 2018 after Bitcoin surged to its highest price in late 2017.
For Ethereum to get back to the $1400 area, Bitcoin will have to break the recent resistance area, which is getting hard for the bulls to break.
For retail traders that are still holding their long on Bitcoin and other cryptocurrencies, it is advisable to take some profit now and wait for the resistance to be cleared before thinking of adding more money or positions. A break below $17,000 could be the beginning of a huge fall.
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Tobi is a full time day/swing trader with 3 years’ experience in the currency and commodity market. He is interested in cryptocurrencies in combination to the current financial system. Tobi holds a bachelor's degree in Agriculture.