According to Fairlead Strategies, Bitcoin has signaled a countertrend that a pullback is likely due to being overbought. Katie Stockton of Fairlead Strategies advises clients to stop buying the cryptocurrency for now, due to the countertrend signal in Bitcoin. Detail cryptocoin.com‘in.
What does the signal in Bitcoin (BTC) say?
Stockton expects a two-week period of horizontal consolidation that could include a 16% pullback before the long-term uptrend resumes in Bitcoin. “We see any consolidation that occurs as temporary,” Stockton said. According to Katie Stockton of Fairlead Strategies, Bitcoin’s 33% rally in October plunged the cryptocurrency into short-term overbought territory, signaling a countertrend that could lead to volatile trading in the future. In a note to customers on Sunday, Stockton advised customers to delay buying Bitcoin for the next two weeks after a DeMARK “13” signal flashed for Bitcoin.
The counter trend exhaustion signal indicates a two-week consolidation phase for Bitcoin, which could include a pullback to the cloud support level around $48,000. This represents 16% short-term downside potential from current levels. According to Stockton, the DeMARK sell signal was also confirmed by the drop from overbought levels on the daily stochastic indicator. But the long-term uptrend in BTC remains intact, causing Stockton to view any emerging consolidation as “temporary”.
Is the situation temporary?
“We can compare this signal to the one generated in January,” Stockton said. Back in January, the same countertrend signal flashed just before Bitcoin dropped 25% from around $40,000 to around $30,000. This consolidation phase lasted for about three weeks before Bitcoin continued to push all-time highs for three months in a row. And after Bitcoin definitively broke past the $52,900 resistance level last week, Stockton sees the cryptocurrency target its previous all-time high of around $65,000, representing a potential increase of at least 13% from current levels. Despite the countertrend signal triggered on Sunday, Bitcoin continued to rise, jumping around 2% in Monday’s trading session.
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