Bitcoin Drops on Fri, El Salvador Buys the Dip – Analysis, 29 Nov
Last week, the bears dominated the market. Because of the selling pressure, on Friday, November 26th, the price of Bitcoin even dropped below the psychological level of €50,000 and reached approximately €47,000 during the weekend. According to Alternative.me, the Fear and Greed Index fell to 27 on Sunday. Now, it stands at the level of 33 – still in the fear zone.
Despite the panic selling among some of the cryptocurrency users, El Salvador bought 100 more Bitcoins. On Friday, November 26th, Nayib Bukele, the president of the country, announced on Twitter that El Salvador had bought the dip:
For continuously buying the dip and integrating Bitcoin in El Salvador, Bukele got criticized by Andrew Bailey, one of the governors of the Bank of England (BoE) – the central bank of England. "It concerns me that a country would choose [Bitcoin] as its national currency," the BoE representative said yesterday during an address at Cambridge University:
In response to the central banker's critics, Bukele wrote that he is concerned that the BoE continuously prints money out of thin air:
Samson Mow, well-known Bitcoin maximalist, CSO of Blockstream, and Bitcoin Bonds architect, shared Bukele's view on the monetary policy of the BoE by highlighting that printing money is the only thing the central bank of England can do:
After a week of solid bearish pressure, the Monday market starts with a decent price rebound. According to Coin360.com, one Bitcoin costs €50,993.17 (+5.66%), one Ethereum – €3,846.38 (+6.78%), one DOGE – €0.1775 (+6.59%), and one UNI – €17.83 (+4.81%):
Source: Coin360.com (Daily crypto market performance)
Now, let us look at the price charts of the top cryptocurrencies against the euro in the most noteworthy time frames.
In the weekly chart (1W), after the Bearish Engulfing we outlined last week, BTC/EUR formed a Hammer:
A Hammer is a candlestick with a small bearish or bullish body and a long lower shadow. According to the technical analysis theory, this candlestick pattern indicates a potential price reversal to the upside. Nevertheless, we think it is too early to claim that this is the beginning of the uptrend renewal. It would be better if, in the smaller time frames, we find bullish signals.
So, let us have a look at the daily chart of (1D) BTC/EUR, where the price remains within the Ascending channel (uptrend):
To enter the market and open a long position, we would like to see a clear rebound from the lower part of the channel. For this, we are keeping an eye on the 1-hour chart (1H) of BTC/EUR, where a Descending channel has formed:
Only if the price exits the Descending channel upwards, we may open a long position. Otherwise, we will remain in wait-and-see mode.
Similar to the price chart of Bitcoin, in the weekly time frame (1W), after the Bearish Engulfing, ETH/EUR formed a potential trend reversal candlestick – a Long-Legged Doji:
A Long-Legged Doji is a candlestick with long upper and lower shadows and a very small body (or even without a body). In technical analysis theory, this candlestick pattern signals indecision about the future price direction. In other words, this might be an initial signal that the market is starting to consolidate and, later, resume the uptrend.
We once again would like to outline that, in the daily chart (1D), we've been waiting for a buy signal based on the Cup and Handle (C&H) technical pattern – a typical bullish formation:
If the price of Ethereum bounces off the upper line of the C&H and surpasses the last local high, then a buy signal will occur. In this case, we will probably open a long position.
In the weekly chart (1W), DOGE/EUR has formed another bearish candlestick:
As can be seen from the chart, this candlestick continues the sequence of candlesticks with lower local lows and lower local highs, respectively. It is a candlestick pattern confirming the bearish dominance in the market. That's why, for now, we will stay away from the market.
In the weekly chart (1W), after the consolidation, UNI/EUR has formed two bearish candlesticks:
That is a clear signal that the bears are controlling the market. Because of this, we will stay away from the market and wait for better times.
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