It’s been slim pickings of late for owners of the No.1 digital currency, but coming off a subdued week, there are signals that more fruitful times may lie ahead, says one technical analyst.
“While it is premature to conclude the correction is over, there was a positive technical development this week suggesting the first stage of a three-stage bottoming process is developing,” said Rob Sluymer, technical strategist at Fundstrat Global Advisors, in a note to clients.
According to Sluymer, the three stages of a bottoming are a deceleration of the downtrend, a move back above the downtrend and then a reversal of the actual downtrend; and after bitcoin
traded in its narrowest range of the year, phase one may be playing out.
Furthermore, bitcoin is holding the support line above $7,000 and pushing against a closely-watched short-term indicator. “The 15-day moving average has been a good proxy for trends,” said Sluymer in an interview, adding that momentum indicators have moved from overbought in May, to oversold.
Sluymer expects bitcoin to make an upside attempt in the next few days to test the 15-day moving average, which “remains negative.” A moving average is a popular technical indicator to analyze price trends over a specific period of time.
Sluymer’s colleague, Tom Lee is one of the biggest bitcoin bulls and has a year-end target of $25,000 for the worlds biggest digital currency.
While Sluymer may not be ready to call the bottom in bitcoin, he does see evidence that those betting against it should consider banking some profits. “We recommend tactical investors/traders begin reducing BTC short positions and begin phasing in long positions,” said Sluymer.