With the market filled with anticipation for Trump's proposal to create a national-level Bitcoin reserve, and buoyed by the optimistic expectations of a rate cut by the Fed this week, Bitcoin surged past the $106,000 mark this morning, breaking the previous high record set on December 5th. Bitcoin has now recorded seven consecutive weeks of gains, marking the longest weekly winning streak since 2021. Since the US election, Bitcoin has cumulatively soared over 55%, and has gained more than 14% in the past month. The market sentiment indicator "Greed & Fear Index" has even spiked to 83, entering the "Extreme Greed" zone, indicating that investors are extremely bullish on the future market outlook.
However, the Bitcoin rally may face correction risks, especially as the pace of gains slows down, which could mean increased short-term pullback pressure. As of the time of writing, Bitcoin has retreated to $104,615, with a gain of around 2.75% in the past 24 hours.
Trump's friendly attitude towards cryptocurrencies has completely reversed the Biden administration's high-pressure regulatory environment, becoming an important driver for Bitcoin's rally. He not only proposed the establishment of a national Bitcoin strategic reserve, but also called for the US to become the global leader in the cryptocurrency industry, reigniting market expectations. This policy orientation is undoubtedly a catalyst for Bitcoin to break new highs, and will also propel the cryptocurrency market into a new round of frenzy.
The US Federal Reserve will hold a policy meeting on December 18th, and the market generally expects a 25 basis point (0.25%) rate cut. If the interest rate decision meets expectations, it will further drive capital flows into the high-yield cryptocurrency market.
Bitcoin 4-hour chart
First, based on the Bollinger Bands indicator on the Bitcoin 4H chart, the current price is near the upper band, in the overbought area, indicating a risk of short-term correction. The Bollinger Bands are expanding upwards, indicating that the market is in an overall uptrend, but the deviation between the price and the upper band is large, which is likely to trigger an adjustment.
Secondly, based on the KDJ indicator on the Bitcoin 4H chart, the K-line and D-line values have already entered the overbought area above 80, and the J-line value is even higher and starting to flatten, indicating that the market is in the short-term overbought zone and may see a corrective pullback.
Finally, based on the MACD indicator on the Bitcoin 4H chart, the DIF line and DEA line are above the 0 axis, indicating that the market is still in a bullish trend. The MACD histogram is red and growing, suggesting that the current bullish momentum is strong, but a potential top divergence should be noted. If the red MACD histogram starts to shorten, it would indicate that the bullish momentum is starting to weaken, and the price may experience short-term volatility and correction.
Bitcoin 1-hour chart
First, based on the Bollinger Bands indicator on the Bitcoin 1H chart, the price has started to pull back after touching the upper band, and is currently above the middle band. The Bollinger Bands are opening upwards, indicating that the market is in an uptrend. However, the price has encountered resistance after reaching the upper band, showing signs of a correction. In the short term, it may retest the middle band (around $104,000) for support. If the price can stabilize above the middle line, it may continue to attack the upper Bollinger Band.
Secondly, based on the KDJ indicator on the Bitcoin 1H chart, the KDJ three-line values have turned down from the overbought zone, although they have not yet formed a clear death cross, this also suggests that the market may face short-term correction pressure.
Finally, based on the MACD indicator on the Bitcoin 1H chart, the DIF line and DEA line have formed a death cross at the highs, indicating that the short-term bullish momentum is weakening, and the MACD histogram has also turned from red to green, suggesting that the market momentum is gradually fading, and there may be correction pressure in the short term.
In summary, the Bollinger Bands channel is still expanding upwards, indicating that the overall trend remains bullish, but the death cross on the 1H MACD and the KDJ indicator in the overbought zone suggest that there may be some short-term correction pressure. The key is to watch the support strength around the 1H Bollinger Bands middle line (around $104,000). If it breaks below the middle line, it may further test the $103,000 level.
In conclusion, the wizard offers the following suggestions for your reference:
Suggestion 1: Short Bitcoin at around $104,800, with a target of $103,300-$103,000 and a stop-loss at $105,300.
Suggestion 2: Go long Bitcoin at around $103,300, with a target of $104,000-$105,000 and a stop-loss at $102,800.
Writing time: (2024-12-16, 17:30)
(Article by the Wizard of Coins)
