Bitcoin is up just over 2.7% in the last 24 hours, causing many people to FOMO and drop their cash to get their hands on some glorious Bitcoin.
But, if you’re going to dabble in this little pump, it’s imperative that you use the utmost caution as everything isn’t what it seems.
Trading on smaller time scales is very dangerous and a single whale can cause a huge impact, so be very cautious.
The Long-Term Trend is Still Down
For those of you trading on 1 hour or shorter time frame charts, the gains look rather epic, with green candle after green candle, but the true story can be rather different.
Trading on short time frames can be very dangerous as these candles can be changed by a single buy or sell order.
If you’re trading properly, you should be using at very least four-hour candles, with 1-day candles being the optimum.
On the longer time frame candles, Bitcoin is still in a heavy downwards trend, despite this short pump.
This means one of two things. That the current pump is just a whale pumping and we’ll see the action top out close to $9,450 or this could be the beginning of the next proper bull run.
We’re currently leaning towards the action topping out at $9,450-$9,500 simple due to the fact that this is a resistance level.
Lots of traders should have stop losses set up here, meaning that a lot of sell orders will be triggered, stopping the momentum.
If this truly is the case, we will see Bitcoin slide back down to the mid $9,200 range in a couple of hours.
On the other hand, if Bitcoin manages to sustain these gains and break the downward trend it’s currently on for several consecutive days, we could be in for a nice bullish run.
Time Will Tell
Unfortunately, 7 one-hour candles are not enough to confirm whether this is the trend breaker or not, so do tread with caution.
We will need to see three of four 1 day closes above the trendline, which is currently sat around the $9,300 level.
Having been in the Bitcoin trading world for a number of years now, we’ve seen this setup far too often to fall for FOMO.
If you’re a wise trader, you’ll sit on your hands and wait to see how this move pans out – if anything placing a short.
If we’re going to see how this pans out, we will need to wait a few days.
Our best advice for now is presume the downwards trend is still in place and that this is just a whale buying a few Bitcoin – after all, it’s close to the logarithmic best buy price.
Volatility is still in the air, so trade with caution. Don’t believe everything right off the bat.
Give Bitcoin a few more days to settle or for a new trend to start to form before you buy more Bitcoin.
However, if you’re on the selling side after a big Bitcoin win at a Bitcoin casino, now might be a pretty good time to cash profits.