Investing.com | May 20, 2021 09:38AM ET
Lately, Bitcoin has been on the receiving end of an array of negative headlines, provoking a series of panicked selloffs of the cryptocurrency.
Since early May, the flagship digital token has lost more than 30% of its value, collapsing on Wednesday to almost $30,000 intraday. That's close to a 50% nosedive from its mid-April high of over $63,000. Which just ads fuel to the already roiling debate on whether the digital token should be treated as a store of value or a means of payment.
The specific reason for yesterday's plunge? Chinese banks tweeted two emojis simultaneously—an image of a diamond next to a pair of upraised hands, signifying his continued belief in the value of Bitcoin, as a way of negating the rumors.
These recent developments might be a blow to crypto enthusiasts who see the digital coin as a deregulated form of money, uncontrolled and not manipulated by national governments. But then many of them are true believers and may simply see this all as just another speedbump on the way to higher Bitcoin prices, eventually.
We, however, have been negative on Bitcoin for some time. We set a target for the $30K level on May 6.
Now, that the digital coin has touched down at that point, reaching our target, we believe it's time to get back in for the rebound.
BTC found support at its uptrend line since October 2020, off which it bounced back above the 200 DMA. The RSI also bounced back, above 30.00 from 22.51, which was the momentum indicator’s most oversold level since March 2020, when Bitcoin reached rock bottom at $4,000.
From that point it catapulted upward, gaining 16 times its value in as little as 13 months.
To clarify, we don’t in fact know that Bitcoin will reach $100,000 or $1 million. All we’re saying is that the cryptocurrency has dropped significantly and now is an ideal time to enter a buy order from a risk-reward perspective.
Note, the current rally may be short-lived. It could be just a return-move to retest the H&S neckline before another leg lower.
Conservative traders should wait for a new high to extend the uptrend.
Moderate traders would wait for the price to close well above the neckline.
Aggressive traders could act at will, according to corresponding trading plan.
Here’s an example:
Trade Sample 1 – If this is not just a triggered return to the neckline
Trade Sample 2 – Avoiding the risk the neckline will maintain resistance
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