The former equity trader with the Bank of America said Thursday that he would purchase bitcoin if the crypto-asset compliments a crucial technical indicator.
Dubbed as Moving Average, it allows traders to calculate an average asset value for a given period after removing noisy price movements.
Should you buy #Bitcoin now? Here is a methodological approach which can help you.$XRP token is still holding above 0.30 and it shows bears are running out of steam pic.twitter.com/Hvi0zatQCK — Naeem Aslam (@NaeemAslam23) February 28, 2019
Aslam illustrated a weekly chart, which showed BTC testing a 200-week simple moving average as support. According to him, if traders buy BTC above the said support, they would be technically purchasing the asset at a prime rate.
For instance, if the bitcoin price at press time is $3,966, and its previously established bottom was at $3,100, then a trader would purchase bitcoin by paying an additional $866.
“For over the span of two to three to four years – that’s how the life cycle goes when it comes to the price action – paying a premium on bitcoin is not a big problem if it is going above $20,000,” explained Aslam. “So that is where the argument is.”
Aslam’s argument followed months of discussion about whether bitcoin established its bottom near $3,100. Many analysts predicted that the cryptocurrency was due to another bearish breakdown.
Bloomberg in December 2018 reported that they expected BTC to drop as low as $1,500 in the coming months. Nevertheless, the cryptocurrency managed to float above the said bottom since its first marking.
But, according to Aslam, 200-week moving average represents a strong bull case. The chief market analyst indicated that BTC wouldn’t fall into a bull trap as long as it’s price stays above the average. At press time, the 200 SMA on BitFinex is near $3,379.
Aslam also discussed the interim factors that were driving his bitcoin positions. He noted a lower low developing out of a recently-started downtrend.
While the bearish move didn’t mature into a breakdown action, Aslam said that he would be more likely to take long positions in BTC if price forms a higher high. In simple terms, the upcoming candle formations lowest price should be higher than the lower low indicated in the chart illustration above.
While Aslam’s prediction expires in a three-four year span, traders are already battling with an active resistance area which would need breaking in the near-term. Bitcoin has failed to cross above $4,299-4,488 range since November 23, 2018.
Speculators believe that the launch of Bitcoin derivatives, including futures and exchange-traded fund, would bring billions of dollars into the industry. And then, the bitcoin rate will push beyond the said range.
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