Chart Of The Day: China’s Interest In Blockchain Fails To Boost Bitcoin
Investing.com | Oct 28, 2019 10:00
This morning, Bitcoin gave up early gains and continued on to trim half of yesterday’s increase as well. The initial jump occurred after China’s President Xi Jinping announced the country will increase its investment in blockchain technology.
And when China invests, it goes big. Consider the timing.
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Today's announcement follows Friday’s release that the first stage of a U.S.-Sino trade resolution is underway. China, after all, has been at a disadvantage throughout the trade dispute, since it's so reliant on the U.S. dollar for its global trade, initiatives and investments.
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The Asian nation has long been vying to have its currency, the renminbi, compete as a world reserve, the primary reason it launched yuan-denominated crude oil futures in March 2018. Still, that hasn't particularly boosted the currency's position on the world stage. Which may be why China is now focusing on the development of blockchain technology.
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So, why would a Bitcoin rally flip into a loss after the news broke? Did investors realize their excitement was premature, considering crypto trading and exchanges remain banned in China, in force since 2016, and that all the Chinese government may be interested in is the technology, which can revolutionize finance and manufacturing.
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Perhaps, on the other hand, the price was simply suppressed by the technicals.
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For three days in a row, Bitcoin attempted but failed to surpass the $10,000 level on a closing basis, as well as the 100 DMA. Also, the price has been caught in a nexus of space and time. The price level at this point on the chart is where the top and bottom of a descending triangle top meet.
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While the price crossed above the 200 DMA, the 50 DMA just fell below the bigger MA, triggering a death cross—right below the bottom of the bearish triangle, underlying just how critical this price level is in terms of interests at play.
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Finally, note the resistance (red dotted line) since August, which seems to be holding.
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Conservative traders would wait for the price to post a new low, below the Oct. 23, $7,3451.50 level, before considering a short, or above the June 26, $13,764 high to brave a long position.
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Moderate traders may risk a short with a close back below the 200 DMA, or a long with a close above $11,000, the resistance since August.
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Aggressive traders might short now, counting on the triangle top.
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Trade Sample: Short Play
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Author's note: This is just a trade sample. There's no guarantee it will win. As a rule, traders require multiple trades in order to be profitable over all.
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