3 Reasons Why Shorting McDonald’s (MCD) Stock Now Is a Bad Idea

  • A slew of negative developments that includes missing third quarter estimates and the firing of the CEO are giving investors ammunition to short McDonald’s.
  • Technical analysis of the shorter and longer time frames reveal that the fast food giant is likely to bounce.
  • McDonald’s is also aggressively repurchasing shares, which increases the odds of shorts getting liquidated.

Many investors are bearish on McDonald’s (NYSE:MCD), and understandably so. The fast food chain missed key estimates in its third quarter earnings report. On top of that, the company’s board recently fired its CEO Steve Easterbrook for dating a fellow employee. Having a consensual relationship with an employee is a violation of company policy. Lastly, McDonald’s appears to be losing bullish steam as the shares are down by over 11% from the all-time high of $221.93.

The series of unfortunate events for the fast food giant is driving investor sentiment. It appears that retail traders are so bearish on the stock that even a partially deflating Ronald McDonald balloon is seen as a short signal.

short MCD
Ronald McDonald is not having a good day. | Source: Twitter

Nevertheless, shorting McDonald’s at current levels is not a good idea. Here are three reasons why.

1. McDonald’s Is Ripe for a Bounce

McDonald’s lost all bullish momentum after it broke down from a textbook head and shoulders top in October. This led to a waterfall event that saw the equity drop to as low as $187.55 on Nov. 4. At that point, bulls were able to stop the bleeding. They managed to hold support of $188.

Trader Hidden Pivots closely followed the action. He sees a possible bounce on the horizon after MCD negated the bearish continuation pennant.

MCD daily chart
MCD showing signs of strength after being under bear control for over two months. | Source: Twitter

2. McDonald’s Looks Bullish in the Longer Time Frame

Shorting a stock that’s macro bullish can quickly backfire. This is especially true if technical indicators are flashing close to oversold readings. These are the signals that I am seeing in McDonald’s.

The weekly chart of McDonald’s shows bullish tendencies
The weekly chart of McDonald’s shows bullish tendencies. | Source: TradingView

The weekly chart tells me that MCD is trading within an ascending channel, which is a bullish pattern. In addition, the stock is sitting very close to the uptrend support while indicators say that MCD is undervalued. This long-term technical picture tells me that the equity is more likely to resume its uptrend than breach a support that has been driving prices higher since 2015.

Thus, it might be a fool’s errand to short the stock at current levels.

3. McDonald’s Stock Buyback Royalty

McDonald’s is one of the companies that invests heavily in stock repurchases. In the last three years, the fast food giant has scored an average buyback ratio of 5.7 out of 6.5. To put that in perspective, MCD’s three-year average buyback ratio is higher than 95% of the 228 companies in the restaurant business.

MCD is at the top of its stock repurchase game
MCD is at the top of its stock repurchase game. | Source: Gurufocus

The numbers add up. Marketrealist reports that in the last three years, McDonald’s spent $25 billion to reward shareholders in the form of stock buybacks and dividends. In the first three quarters of 2019, the company has bought back over $3.53 billion worth of shares.

If you plan on shorting the stock, know that you are going against a company that’s aggressively buying back shares. Would you be willing to make that bet?

Shares of McDonald’s may be down big from the all-time high but shorting at current levels may not be a wise move. Signals tell me that the stock is more likely to bounce now than to continue descending.

Disclaimer: The above should not be considered trading advice from CCN. The writer does not own McDonald’s (MDC) shares.

This article was edited by Sam Bourgi.

Democratic 2020 Hopefuls Won’t Beat Donald Trump if They Can’t Beat Baby Yoda

  • Baby Yoda, the fictional character from “The Mandalorian,” is taking over social media feeds.
  • Even with the entry of billionaire Michael Bloomberg, the Democratic aspirants trail the adorable alien in terms of social media interactions.
  • Baby Yoda’s dominance may be a sign that Democratic candidates are no match against Donald Trump.

Baby Yoda is taking social media by storm. The uber cute character from Disney+’s hit series “The Mandalorian” is capturing the imagination of millions of Star Wars fans. The breakout star is out-trending all Democratic 2020 candidates on Facebook and Twitter. If they can’t beat Baby Yoda, it may be hard beating Donald Trump.

The doe-eyed green creature that maybe the clone or the offspring of Yoda made its debut on Nov. 12. The character’s appearance coincided with the entry of two new Democratic candidates: Michael Bloomberg and Deval Patrick. The candidates were the beneficiaries of thousands of articles since their arrival at the Democratic stage. Yet, both are trailing against the Jedi Master look-alike in terms of social media interactions.

On top of that, Baby Yoda is driving nearly twice the number of social interactions per story than any Democratic 2020 aspirant. This is bad news for the possible contender who wishes to dethrone Donald Trump. The POTUS is a social media savant.

Tale of the Tape: Baby Yoda Is a Social Media Heavyweight

The diminutive character from the Star Wars spin-off is taking over Facebook and Twitter. According to NewsWhip data exclusively provided to Axios, Baby Yoda leads all Democratic candidates on average social interactions per story. On average, the adorable alien drives 1,671 social interactions per story, which is almost double the number of Bernie Sanders (850).

Other candidates fare much worse. Joe Biden’s interactions per story stand at 839 while Pete Buttgieg ranks fourth at 600.

The force is strong in Baby Yoda
The force is strong in Baby Yoda. | Source: Axiom

Baby Yoda may be behind in terms of media saturation but the delightful star has managed to spark reader interest. Axiom reported that Bloomberg was the subject of 7,650 articles since Nov. 12 to rank second among Democratic hopefuls. Patrick comes in at number four with 4,044 articles. Meanwhile, Baby Yoda takes the tenth spot with 1,368 articles. Nevertheless, the character has bagged ten times more social interactions than both late entrants.

Donald Trump Has Twitter Eating at the Palm of His Hands

Democratic candidates are in big trouble if they can’t even compete against a fictional character. Keep in mind, Baby Yoda isn’t tweeting or actively doing something to inspire social media traffic. It’s difficult to imagine how they can stack up against a marketing genius, Donald Trump.

The POTUS is masterfully using Twitter to boost his presidency. One tweet from Trump can send the stock market soaring. A few targeted tweets is enough to influence the Federal Reserve to cut interest rates. Trump is so effective in delivering a message on Twitter that each tweet has a market value of $82,140.74 and an engagement value of $935,189.67.

The monetary values of a Donald Trump tweet
The monetary values of a Donald Trump tweet. | Source: Twitter

In addition, the president is a tweet machine. In September alone, Trump tweeted 797 times. By actively voicing out his thoughts on the microblogging site, the president is making a strong effort to stay relevant.

Democratic seekers are up against a social media behemoth in Donald Trump. The fact that they’re getting overshadowed by a 50-year-old alien that looks like a baby doesn’t bode well for their presidential prospects. They would be outgunned, outplayed and outclassed by a billionaire entrepreneur who stole the presidency from Hillary Clinton by leveraging social media. Brad Pascale, Trump’s digital director said,

Facebook and Twitter were the reason we won this thing.

This article was edited by Sam Bourgi.

Bitcoin Is Ideal Hedge Amidst Rising Global Uncertainty – CCN.com

The U.S.-China trade war, the Hong Kong protests, and now the attack on Saudi Arabian oil producer Aramco – these events add more pressure to financial and commodity markets that already look overextended; stocks are trading close to all-time highs. On top of that, central banks are slashing interest rates and printing money while the real-estate market is still overpriced.

Asset valuation chart
Stocks, bonds, and property markets are all more expensive than the historical average at one standard deviation | Source: SeeItMarket

If you’re an everyday investor, it appears that your options to protect your wealth are becoming limited. The good news is that there’s an asset that you can use as a hedge. Best of all, this asset is not correlated with other traditional markets.

Bitcoin’s Price Movements Are Uncorrelated With Other Assets

The value of stocks, bonds, and other asset classes is tied to factors such as GDP, earnings, and interest rates. Bitcoin, on the other hand, appears to be dancing to its own tune. Bitcoin is dubbed by many as the “new gold.” However, the dominant cryptocurrency is not correlated with any asset, especially gold.

Bitcoin not correlated with other assets
Spearman chart reveals that bitcoin is not correlated with stocks, gold, and the U.S. dollar | Source: Coinmetrics

A look at the Spearman correlation chart reveals that overall, the No. 1 cryptocurrency has no correlation with other assets such as gold, stocks, and even the U.S. dollar.

There were stretches when gold appeared to be moderately correlated with bitcoin. This relationship appears to be a deviation rather than the norm. On the other hand, there were also moments when stocks appeared to have a moderate inverse correlation with bitcoin. Here again, these periods seem to be out of the ordinary.

In addition, a recent study used a quantile-on-quantile regression approach to examine the relationship between the king of cryptocurrencies and oil. The study concluded that bitcoin serves as a hedge and a diversifier against oil price movements.

Therefore, these findings suggest that bitcoin appears to be an ideal hedge – especially in a global environment that’s charged with geopolitical risks. The stock market, the U.S. dollar, gold, and oil may go up or down and bitcoin would still continue appreciating considering that it is in a bull market.

People Are Already Using It as a Hedge

With instabilities gripping various countries, many are already looking at bitcoin to protect their wealth. Clem Chambers, CEO of ADVFN and Online Blockchain plc, spoke exclusively to CCN.
He said,

“Bitcoin is the new gold and as such it is used as ‘flight capital’- an asset which can be moved and stashed in times of trouble. These days there aren’t many objects you can use for this purpose; gold, for example, being difficult to buy, secure and move.”

The difficulties that gold presents as a store of value may be the reason why it is uncorrelated with bitcoin. In addition, the financial market website executive also stressed:

“The U.S./China trade war brings about conditions where flight capital is in demand because if it continues, in addition to all manner of instabilities, currency depreciation is highly likely. Rich Chinese cannot send their money abroad to stash in foreign currencies in foreign banks, but they can get access to bitcoin. This is almost as good as having U.S. dollars offshore.”

Lastly, Mr. Chambers affirms our findings that bitcoin serves as a hedge against geopolitical crises.

“Bitcoin is the axis of this year’s rally and it is driven by the U.S./China trade war, with the Iran situation and Hong Kong protests adding to the demand.”

With countries in turmoil and traditional assets offering limited upside, it appears that bitcoin may be a good way to protect your wealth.

Last modified (UTC): September 16, 2019 5:55 PM

Dismal Jobs Growth and Consumer Spending to Supercharge Bitcoin – CCN.com

Bitcoin bears have come out of hiding over the last few weeks as the number one cryptocurrency struggles to stay above $10,000.

Since the digital asset printed a 2019 high of $13,880 on June 26th, market participants started to feel jittery. In the last month, market sentiment has ranged from fear to extreme fear.

The overall bearish outlook is encouraging traders to post bearish charts.

While bitcoin price action seems indecisive at best, it appears that the current economic climate is likely to impact the value of the dominant cryptocurrency. One analyst believes that the turbulence brought about by slowing jobs growth and consumer spending will be significantly favorable for bitcoin.

Analyst: Manufacturing Woes May Signal an Economic Recession

The manufacturing industry has been in the headlines in the last few weeks after a report revealed that the ISM Manufacturing Index has dropped below 50 for the first time since 2016. The plunge to 49.1 indicates that the manufacturing industry is shrinking.

At LaDuc Trading, Samantha LaDuc leads the analysis, education, and trading services; she’s also CIO for LaDuc Capital LLC. She spoke to CCN and said,

Rates collapse when manufacturing collapses.

The declining interest rates implies that the economy is headed for a recession. Diane Swonk, chief economist at Grant Thornton elegantly explains this dynamic.

It appears that even without Trump’s interference, interest rates are likely to plunge due to the shrinking manufacturing industry. With the manufacturing industry in trouble, Samantha LaDuc said that,

logic dictates that jobs will soon suffer and as a result the consumer.

While there have been a couple of times over the last eight years when manufacturing payrolls nosedived, private services payroll stayed afloat. These happened in 2013 and 2016. However, this time is different. The services payroll is slowing down along with manufacturing payroll.

This is another significant development as a drop in jobs growth in both industries will likely impact consumer spending.

With consumption almost ready to plummet, LaDuc says that we’re likely to face a

backdrop of business uncertainty and investment indecision.

The trader also noted,

I am still expecting the S&P 500 to take out recent lows and trade sideways-to-lower into 2020 elections.

This sideways trading along with the economic uncertainty is ultimately beneficial to bitcoin.

Bitcoin and Other Assets Are Presenting Better Investment Options

With the current economic backdrop, it is very possible for capital to flow out of the S&P 500 and into safe-haven assets. Samantha LaDuc expects investors to start buying gold, bonds, and bitcoin. She emphasized,

I can see a pattern where safe haven bets of bonds, gold, Yen and even bitcoin are being bid up not just in reaction to their value representing better return than most equities currently in this geo-politically charged environment and negative yield world.

She also added,

These safe haven assets are perceived as protection for portfolios as well as delivering alpha.

In terms of delivering alpha, bitcoin is second to none. The cryptocurrency has given a greater risk-adjusted return compared to other major asset classes in the last five years. According to the analysis published by OKEx on Medium, bitcoin has a 4-year Sharpe ratio of three, which means that it has an excellent rate of return for a given level of risk. Every other asset has a Sharpe ratio of below two.

With the U.S. economy showing signs of vulnerability and according to Samantha, the S&P 500 will likely provide limited upside alongside other major assets, it is only a matter of time before market makers and institutional investors see bitcoin as one of the best investment options.

Last modified (UTC): September 13, 2019 2:12 PM

Venture Capitalist: Bitcoin Offers Escape From Crippling Monetary Policy – CCN.com

According to Investopedia, the first paper money in the U.S. was issued on February 3, 1690 by the Massachusetts Bay Colony. Less than two hundred years later, Americans were able to trade $20.67 for an ounce of gold. In other words, the U.S. dollar was backed by gold.

This was an effective system as it limited the monetary supply. In 1933, President Herbert Hoover famously quipped,

we have gold because we cannot trust governments.

Sadly, it is also the same year that the U.S. started to abandon the gold standard.

By 1971, the connection between gold and the U.S. dollar was completely severed. What ensued was almost fifty years of dollar devaluation.

Central Banks Create Inflation

In 1913, the U.S. government created the Federal Reserve. The purpose of this institution is to oversee monetary policy and help stabilize the economy. It also has the power to print more money digitally by issuing credit to major banks.

This is how inflation takes place. Without any asset backing the dollar that could limit monetary supply, the Federal Reserve can simply introduce more fiat currency into the economy. Over time, the value of the dollar declines as the central bank injects more money into the system.

In the image above, you will see that the purchasing power of the U.S. dollar has plummeted by 95% since the creation of the Federal Reserve.

This is bad news for every citizen. You may not feel it but your wealth is slowly losing value over time. However, there’s an escape. The solution for wealth preservation works so well that the elite call it rat poison due to fear and lack of understanding.

Venture Capitalist: We Now Have the Opportunity to Exit the Monetary System

If you have a million dollars today, it wouldn’t have the same value next year. In other words, you’re losing money due to the inflation stimulated by the central banks. But now, you have the chance to preserve your wealth.

Nic Carter, a partner in Castle Island Ventures and a former cryptoasset analyst at Fidelity, spoke to CCN on how bitcoin can help citizens preserve their wealth. He said,

You’re defaulted into using the local sovereign currency, even if it’s highly inflationary. Most normal savers do not have other options, and much of the time have to deal with capital controls so they cannot exit to other currencies or assets.

The venture capitalist added:

Bitcoin gives us, for the first time, the option to exit our local monetary system with our funds intact. They can no longer default every local citizen into their potentially ruinous monetary schemes.

Before the existence of bitcoin, people bought properties, gold, and other precious metals to shield their wealth against inflation. However, Nic Carter said that these stores of value are harder to obtain and store. Thus, he noted that cryptocurrencies are low-friction assets; they are easier to buy and can be stored safely through a hardware wallet.

At the end of the interview, Nic Carter stressed,

For the first time [governments] face low-friction outflows if they adopt too inflationary a policy.

It may be possible that in the future, those who call bitcoin rat poison would eventually have to seek financial refuge in the cryptocurrency.

Last modified (UTC): September 13, 2019 2:04 PM

Top Analyst Says Ethereum Screams ‘Buy’ As It Prepares for a Wave Up – CCN.com

Ethereum (ETH/USD) has gone through a corrective period over the last two months. Since posting a 2019 high of $363.30 on June 26th, the cryptocurrency lost more than 50% of its value. The sentiment has become so bearish that some traders are calling for a move below $100.

However, a leading Wyckoff analyst thinks the exact opposite. The technical trader believes that the retracement is over and the cryptocurrency is getting ready to skyrocket.

Analyst: A Strong Wave up ‘About to Commence’ on Ethereum

If you’re a long-term Ethereum investor, we have good news for you.

Todd Butterfield, the owner of the Wyckoff Stock Market Institute, believes that ETH has posted its 2019 low. The leading technical analysis expert exclusively shared his insights with CCN. He said:

ETH rallied during 2019 in a clear five wave advance, and then proceeded to correct in a WXZ fashion into the recent lows at $163. To Elliott Wave practitioners, this would be an area to enter long positions.

The analyst added:

Off of the recent lows, you can easily see a series of 1-2s. 1-2s could signify a strong wave three about to commence to the upside.

In technical analysis, wave three is the longest wave up. Those who time their entry before wave three erupts are often rewarded with ridiculously handsome profits.

Technical Indicators Validate the Wave Count

Classical charting principles also appear to support Mr. Butterfield’s bullish stance. The Wyckoff expert looked at the volume, price action, and a proprietary indicator called the Technometer. He concluded that the writings on the wall support his Elliot analysis. He said:

As you can see at the areas marked by the blue lines, OP (volume) went to new lows recently while price held above the lows at $163. This was telling us that selling pressure came into the market but someone was willing to hold the price at higher lows of $167.

In addition, Mr. Butterfield noted:

We have also seen the Technometer registering oversold readings at the recent lows. This is bullish action and also gives us a low risk area to enter long positions. Thus, we are bullish ETH with protective sell stops at $166.

If Mr. Butterfield’s read is correct, then buckle up. The next wave up would leave everyone in a state of massive disbelief.

Last modified (UTC): September 13, 2019 1:08 AM

‘Candy for Millennials’ Auto Stock Has Skyrocketed by 900% – CCN Markets

Carvana Corporation is all about making the experience of buying a used car fun. Buyers browse through the tech company’s selections online. Once approved for financing, users visit one of Carvana’s locations to pick up their vehicle. Before they can take their ride home, buyers have to insert an oversized coin into a slot and activate the car vending machine.

This video below shows the complete pick up experience:

[embedded content]

The unique and interactive experience is attracting a lot of buyers. According to the Wall Street Journal, revenue grew from $859 million in 2017 to $1.955 billion in 2018.

The surge in sales have contributed to the stock’s growth from $8.14 in May 2017 to an all-time high of $84.60 in August 2019. That’s a meteoric rise of close to 940 percent in two years.

Even after an explosive growth, we think that the stock could have more gas in the tank.

Carvana’s (CVNA) Long-Term Uptrend Looks Strong

A quick look at the stock’s weekly chart and you’d easily notice that Carvana is in an unstoppable uptrend.

In August, the equity took out resistance of $72 with heavy volume. This triggered the breakout from a large cup and handle pattern on the weekly timeframe. The breakout pushed CVNA to an all-time high of $84.60. More importantly, the breakout signifies the resumption of the uptrend.

At this point, however, it would be wise to wait for the breakout rally to fade. Ideally, the stock corrects and converts $72 resistance into support. Should bulls seal the former resistance into support, we can expect Carvana to take out its all-time high.

Based on the height of the cup and handle pattern, the target of this bullish breakout is $96.

Analyst: It Is ‘Highly Probable’ for This Stock to Hit $100

The owner of LaDuc Trading, Samantha LaDuc, spoke to CCN and shared her thoughts on CVNA. The trader noted:

“CVNA – cars sold like online vending machines – is candy for millennials. Basically, some folks don’t mind paying up for a better car buying experience and some investors think this could be a disruptive business model justifying its 3.5 times 2019 sales.”

On top of that, the analyst also gave her projections on the stock:

“Having said that, CVNA is falling into the 80-20 rule for technical traders. Once a stock hits $80, which CVNA has, it is highly probable it will hit $100.”

From the looks of it, Carvana is not yet done soaring.

Disclaimer: This article is intended for informational purposes only and should not be taken as investment advice.

On-Fire ONEOK Set to Surpass All-Time High Amidst 30% Surge – CCN Markets

ONEOK (OKE) has been in a strong uptrend ever since it posted lows of $18.84 in December 2015. During this bullish rampage, the stock managed to print an all-time high of $71.99 in July 2018. Since then, the bulls have been struggling to take the stock to greater heights.

David Blair noticed OKE’s inability to convert resistance of $70 into support.

While some traders are bearish on OKE, we are taking the contrarian stance. It is possible that ONEOK could take out the resistance and print a fresh all-time high.

ONEOK (OKE) Flashing Multiple Bullish Patterns

It is true that buying shares at resistance levels is not a wise investment strategy. However, this principle should be reconsidered once the stock forms higher lows while consolidating near the resistance. This tells us that bulls are preparing for a big push.

We’re seeing these signs develop in OKE.

The weekly chart reveals that OKE is painting an inverse head-and-shoulders pattern. This structure indicates that the bulls are using higher lows to push the price up and breach the neckline of $70.

While bulls have been unsuccessful in convincingly piercing the resistance, we believe that it could be only a matter of time before they do. The supply area of $70 has been tapped multiple times over the last year. This suggests that the resistance is nearly drained.

Also, a look at the longer timeframe reveals a larger bullish formation.

The monthly chart shows that the security is brewing a large cup and handle pattern. Thus, a convincing breach of the $70 resistance will likely attract investors who are currently staying on the sidelines.

Analyst: Sees ‘$104 as the Next Reasonable Target’

In addition, Ian McMillan, CMT, an analyst in the RIA industry, shared his stance on CCN. He said:

“Although energy has been a horrible space to be in for the last few years, recently select MLPs have held up pretty decently and ONEOK (OKE) happens to be one of them. From a technical perspective, we are currently sitting below resistance around the $72 area, going back to 2014. If we were to break above this level, and hold, I think you could look at $104 as the next reasonable target on the upside.”

This is our case for why ONEOK is threatening to breach its all-time high.

Disclaimer: This article is intended for informational purposes only and should not be taken as investment advice.

Symantec Turning Tech Data Privacy Issues Into Growth Opportunities – CCN Markets

Many tech firms have been at the center of controversy as of late due to privacy issues. Last year, Facebook CEO Mark Zuckerberg was summoned by the U.S. Congress on privacy concerns. This year, we learned that tech giant Apple has been using contractors to listen to Siri voice recordings. The best that the company can do is to say “sorry” for listening to users’ private conversations, business deals, and even sexual encounters.

While these privacy violations are unacceptable, it is difficult to protect our data because we rely heavily on these tech companies. This is why some users are investing in products that help them take control of their online privacy.

One name that often comes up is Symantec, the company behind the well-known Norton brand.

Symantec’s (SYMC) Long-Term Uptrend Remains Healthy

Symantec can also protect your online data as much as it can protect your system from viruses, malwares, and hackers. The release of new products that help control user data is helping the company’s stock stay strong.

A look at the security’s monthly chart reveals a healthy uptrend.

SYMC continues to respect its multi-year uptrend line. This diagonal support has been in existence since 1998. Thus, we expect the bulls could continue defending it in the foreseeable future.

With the uptrend line intact, the stock was able to take out two resistance levels this month. The first one is the diagonal resistance and the second is the horizontal resistance at $22.

The breach of the resistances triggered the breakout from the large symmetrical triangle. The breakout marks the resumption of the stock’s uptrend. The immediate target is resistance of $32.

Analyst: Expecting ‘A Good Rally From Symantec’

The owner of Wyckoff Stock Market Institute, Todd Butterfield, shared his thoughts on SYMC with CCN:

“Recently our proprietary software shown a bullish divergence between the OP (volume), and Price as marked by the blue arrows. The OP went to new lows while Price held higher lows. At the same time, our Technometer registered Oversold. These conditions led to the recent rally from $20 to $23.50.

The Wyckoff whiz added:

“We, therefore, would purchase Symantec at the market and use a protective sell stop at $20.85. If this rally can get going, we might have a possibility of breaking out of this large trading range and seeing a good rally from Symantec.”

Looks like SYMC may be gearing up for a big push. Use protective stops and enjoy the ride.

This Bitcoin Price Dump Isn’t Over – Not Even Close – CCN Markets

By CCN Markets: The bitcoin price suffered a massive setback on August 28th, crashing through support at $10,000 before testing the low $9,000s.

We warned that this dump would eventually happen, and unfortunately for bulls, technical analysis reveals that the pain isn’t over yet – not even close.

Bitcoin Price Technical Analysis Reveals Bearish Outlook

The 2019 bitcoin price rally has been losing steam ever since it peaked at $13,880 on June 26th. Bulls tried to keep the momentum alive, but each attempt to rally the troops was met by heavy selling.

A quick look at the daily chart above shows that the cryptocurrency appears to have generated three lower highs. Each lower high was painted after bouncing from support of $9,600. The price action led to the formation of a bearish descending triangle.

On top of that, the uptrend support that carried the market to $13,880 has been converted into resistance. This points to the growing strength of the bears. The weak bounce to $10,955.48 on August 20th affirms this bias.

Analyst: There’s ‘No Reason to Believe the Selling Is Over’

In addition, the owner of Wyckoff Stock Market Institute, Todd Butterfield, shared his view on bitcoin with CCN:

“On June 26th our Proprietary Technometer indicator warned of an overbought market and one that was needing a correction. That day, we experienced a Buying Climax (BC) on heavy volume, and then an Automatic Reaction (AR) the following week, and then a rally for a Secondary Test (ST). The Secondary Test came on lower volume when compared to the Buying Climax, which said the high of the Buying Climax would stand as resistance.”

In other words, the Wyckoff expert supports our view that bitcoin is likely to correct in the foreseeable future. In addition, Mr. Buttefield told CCN:

“Since our Technometer is at a reading of 41.82, we have no reason to believe the selling is over, as we are wanting a reading of 38 or below which would tell us the selling has possibly ran its course. So we expect a break of the $9,150 area where we will be preparing buy orders. We expect all time highs shortly thereafter.”

Todd Butterfield has been on the money on his bitcoin calls as of late. The fact that he shares our view makes us confident that the leading cryptocurrency is likely to continue sliding before resuming its uptrend – eventually.

Disclaimer: This article is intended for informational purposes only and should not be taken as investment advice.