Bitcoin : Price Analysis, March 02

2

Bitcoin trading volume is languishing at about half of the average seen during its December peak. While a few believe that this is a sign of an approaching bear market in Bitcoin, we don’t agree with that point of view.




During the frenzy, as seen in December of last year, it is natural to have a surge in volume because traders throw caution out of the window and invest using leverage. Additionally, during a roaring bull market, many newbies enter the markets to make a quick buck. A combination of these leads to a spike in volume.

When prices fall, most newbies are stuck with their positions because they rarely use a stop loss. Many among them would have also purchased in a falling market, exhausting their purchasing power. The only option they see now is to hold until the market recovers. This portion of the volume will not return until a price reaches the December highs.

Cautious traders also don’t venture out in a falling market because it is always better to trade in a market that is in a clear uptrend. Both these reasons combined have led to a fall in volume.

Though we do keep an eye on the volume, we should not get worried about this fact, because we analyze the price action and use it for our trading decisions.

BTC/USD

In our previous analysis, we had recommended booking profits on half positions around the $10,700 mark and trailing the rest because a breakout of the $11,400 to $12,200 resistance zone will complete an inverted head and shoulders pattern, which will be bullish for Bitcoin.




BTC




Currently, the bulls are attempting to break out of the descending channel and move towards the neckline of the inverted H&S pattern. The moving averages are on the verge of a bullish crossover.

All of this indicates that the bulls have an upper hand right now. Hence, chances are that the price will continue to rise in the ascending channel. The BTC/USD pair will gain momentum above $12,200.

However, as traders, we have to be ready for any turn of events. If prices fail to break out of $12,200, chances are the cryptocurrency will become range bound between $9,500 and $12,200 for the next few days.

Therefore, traders should watch the price action at the $12,200 mark carefully and book profits if they find that Bitcoin is not able to break out of it.

Leave A Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.