Bitcoin markets rallied a bit during the trading session on Tuesday, as traders came back from the holiday session. Now that we have broken above the $16,000 level, it looks as if we could continue to go higher but there is a lot of noise above to keep this market very choppy and down. The biggest concern that I have in this market right now is that there is a serious lack of volume. Until Levine comes back full force, it’s likely that the market will be a bit difficult to get a handle on. If we roll over from here, breaking down below the $15,000 level, the market should then go back to the $13,000 level. The stochastic oscillator is starting to try to cross over in the overbought scenario, so that of course is a sign that we could start selling off as well.
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We could also rally though, and that’s the conundrum that I find myself in right now. At this point, I think we break above the $17,000 level, the market probably goes towards the $19,500 level. Volume of course is probably going to be thin for the next week, so we could get erratic moves in both directions. I think that using small positions will probably the best way to express your opinion on Bitcoin, as the market continues to be very noisy. One of the biggest concerns is that we are overbought on the longer-term charts, and sooner or later we are going to need to break down to offer some type of value for longer-term traders. I believe that the volatility is going to be very difficult to deal with, as Bitcoin doesn’t seem to know where it wants to go now that we have a futures market influencing traders. Of note is that many of the institutional investors out there are starting to short the futures market, as a hedge against the spot market. With the larger traders shorting the market, one would have to think that sooner or later they will get their way. That should offer value for the longer-term trader, but until we get clarity, one must think that back and forth range bound trading off the stochastic oscillator is probably the easiest way to deal with this noise.
This article was originally posted on FX Empire