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Bitcoin Reaching Oversold Levels

Since selling my entire Bitcoin position in late April, I have been closely monitoring it and other cryptocurrencies. Even though I'm still very bullish on Bitcoin long-term, I personally do not like to sit through large 30% corrections. While they look like nothing in hindsight, they can be vicious and devastating experiences for those who try to "hodl" through. For me, when I see trouble ahead, I exit. If conditions improve, it's no big deal. I can always get back in.

Now, the question becomes has Bitcoin bottomed? Is it time to reenter? While no one can ever know for sure, I opened a partial position in Bitcoin today for a few reasons. First, it is oversold on RSI on the daily chart. This is a powerful signal that does not occur often during a strong uptrend. Second, there was a heavy volume hammer candle yesterday. This may have knocked out many traders who panicked as Bitcoin traded below the $35,000 level. Shakeouts like this often happen prior to large moves higher. Finally, I like the fact that Bitcoin has retaken its' 200-day moving average which I consider the "line in the sand" for uptrends.





Looking at Bitcoin's chart in 2017 it exhibited very strong action after hammering off the 40-week. Hopefully, history will repeat itself and Bitcoin will have a major run in 2021 just like it did four years prior. After placing my purchase today, I entered a stop loss below yesterday's low to limit my risk. I will add to my position if Bitcoin continues to show strength.


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