Fear is Food: Bitcoin (BTC), Stellar (XLM), DASH

December 20, 2018 / by Bill Noble

Bull markets need fear. In technical analysis, they say a rising market “climbs a wall of worry.” That implies the market can rise in the face of buyers who are too scared to jump in.

In Bitcoin (BTC) and other coins, there is substantial evidence that buyers are afraid because short sellers and bears are still pressing. In Bitcoin (BTC) and other places, there is evidence of a head and shoulders bottom pattern. Head and shoulders bottom patterns are created by three attempts by bears to press a market lower. When the third attempt fails, prices can rise sharply.

In Bitcoin (BTC), there is a confirmed head and shoulders bottom on the intraday chart. Support at $3,891 has held. The upside target is $4,725 (Figure 1). Most likely, fear on the part of the bulls is enhanced by the fact that pullbacks are almost non-existent. We see the lack of meaningfully limited pullbacks as extremely bullish. The more people hesitate, the higher Bitcoin (BTC) can go. This price is very reminiscent of the price action off the lows in equities in 2008.

 class=

For the Bitcoin (BTC) bull market, fear is food. The more afraid people are, the higher Bitcoin (BTC) can go.

The head and shoulders bottom patterns also shows up in smaller coins like Stellar (XLM). XLM is shown in Figure 2. DASH also shows the same pattern. In the case of DASH, everybody is likely afraid to buy after it ran up 25 percent today. All the more reason for it to run up another 15 percent to its target of $106 (Figure 3).

 class=  class=

 

Bottom Line: If you’re bullish, you want to keep hearing things like this: I’ll buy the dip to $3,500. Or I believe Bitcoin (BTC) can go to $4,500 in December, but Bitcoin (BTC) is going to $2,500 next year. Or I’ll buy Bitcoin (BTC) when Bakkt comes out in late January. Or regulators are coming. Or CME futures will crush Bitcoin (BTC). Whatever is said, fear is fuel for the bull. Advanced strategy is when trading in a bull market with limited dips. I will be working with the traders in the Crypto.IQ trading room to develop tactics based on these charts. Join me.