It looks like the cryptocurrency market has finally escaped the negative loop. For the last two days all major cryptocurrencies have demonstrated astonishing growth. As of now, Bitcoin has appreciated 21%, Ethereum — 39% and Ripple — 32%, all over the course of only one week. But what this reversal is all about — is it the beginning of a strong positive trend or a mere retracement that won’t stop Bitcoin from returning to its pre-2017 levels?
Bitcoin and most other cryptocurrencies have reached their all-time high in the end of December 2017. Since then BTC has lost 2/3 of its value, at one point being traded at “only” $5960. Now it is back to growth but for how long? Let’s use several technical analysis tools and predict future price movements.
According to the Alligator, an indicator that excels at identifying new trends and following the existing ones, the surge we can currently observe is not a mere retracement. With both 4 and 8-hour candles the graph looks like a full-fledged positive trend. For how long it will prevail is yet to be seen.
According to MACD (Moving Average Convergence Divergence), a trend-following momentum indicator, the current trend is here to stay. Both short and long-term moving averages hint at an extremely strong upward movement. The growing distance between the two lines is a sign of accelerating growth. In other words, the price action of BTC and its younger counterparts is gathers pace. The same results can be derived from the readings of ADX.
Bollinger Bands, a volatility indicator, apparently point to a volatility spike. The growing gap between the ‘bands’ is a sign of strong upward movement, that is not expected to end soon (at least, for now).
No matter how strong the prevailing trend is, cryptocurrency traders should keep in mind that they are working on a highly volatile market. An important announcement, a major price manipulation or a lack of purchasing power can put an abrupt end to the bullish trend.
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