Bitcoin is about to fully close above its important 200-week moving average (WMA200) resistance, which would officially end the grueling bear market, according to crypto trader Doctor Profit. Historically, breaking above WMA200 weekly has marked the transition point between bear and bull markets.
The successful breakout comes after Bitcoin failed to overcome WMA200 resistance seven times this year alone. However, two weeks ago, we finally saw an explosive breakout with strong follow-through. Now Bitcoin needs to close October strongly above WMA200 to confirm the trend reversal, explains Doctor Profit.
This is great news for bottom-up buyers who acquired Bitcoin between $16,000 and $18,000 earlier this year. Those investors are already sitting on 2x returns. Consider taking some profits, but also hold a core Bitcoin position for the eventual golden bull run over the next 2-3 months following the next halving event, advises Doctor Profit.
We haven’t seen any significant corrections since the rally began. Both the Fear and Greed Index and the funding rates indicate overly bullish sentiment right now, according to Doctor Profit. This suggests Bitcoin is overextended and due for a pullback.
A retest of the breakout level around WMA200 would be healthy. Pay close attention to how Bitcoin reacts there; a bounce could signal the all-clear for resuming the uptrend, while a breakdown could mean more downside ahead, notes Doctor Profit.
One target mentioned months ago was the $37,500–$38,000 zone. Bitcoin is fast approaching that target. Be prepared to take partial profits there, as the first significant correction may emerge around those levels. Consider placing short trades, advises Doctor Profit.
This Week’s Key Events
The most important event this week is the FOMC meeting on Wednesday. The market expects no further rate hikes at this meeting.
In summary, Bitcoin looks poised to close its first monthly candle above WMA200 resistance. This would likely signal the end of the bear market, according to crypto analyst Doctor Profit. However, watch for overextension and expect a retest of the breakout level.
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Take partial profits near $38k resistance, but keep holding a core position for the long-term bull run. Manage risk and reward intelligently this week around the FOMC meeting.
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