Skip to content Skip to sidebar Skip to footer

Bitcoin (BTC) price is still retracing from the massive rally two weeks ago, which leads the sentiment to turn bearish. Several signs indicate that the price needs to reverse quite soon, or the whole upwards move is deleted from the charts.

Crypto market data. Source: Coin360

Crypto market data. Source: Coin360

Bitcoin loses 200-Day MA and EMA for the second time in 2019

The daily chart shows that the price of Bitcoin once again can’t hold support on the 200-Day Moving Average (MA) and Exponential Moving Average (EMA). Such a move often leads to a bearish bias among traders as the 200-Day MA and EMA are crucial indicators for bull/bear perspectives.

BTC USD daily chart. Source: TradingView

BTC USD daily chart. Source: TradingView

Alongside with a drop below the crucial moving averages, the price of Bitcoin wasn’t able to break the downward trendline. This trendline started at the top at nearly $14,000 in June.

Breaking the trendline would provide a vital sign for bullish perspectives on the market.  Additionally, the $7,300 level showed bottom signals with bullish divergences and a falling wedge structure, which resulted in the historic surge to $10,500.

However, this push couldn’t close above the crucial $9,500 resistance area and caused the price to retrace further downwards to the yellow zone. This yellow zone is classified as a potential support area since it previously served as resistance.

BTC USD 12-hour chart. Source: TradingView

BTC USD 12-hour chart. Source: TradingView

However, the price of Bitcoin is currently hanging on a few key levels. First, it’s the previous resistance area seen in October, which can become support if buyers step in here. But the price also retraced towards the golden ratio (0.618-0.65 Fibonacci level) of the whole upwards push from $7,300 to $10,500. This means that bulls must now step in to reverse the downward trend seen so far this month.

Macroview still showing a bullish trend

BTC USD weekly chart. Source: TradingView

BTC USD weekly chart. Source: TradingView

This current market cycle is still showing many similarities with the previous one, i.e. a breakout from the bear market, causing the price to move from $3,100 to $13,900. 

This parabolic move has led to a range-bound period and accumulation at higher levels suggesting that a breakout before the next halving is possible. 

During the last few months, the same movements occurred as the $7,300 level was marked with similar bullish divergences. This also marked the “low range” of the range-bound period, marked green in the chart.

But does this mean further bullishness is warranted? No, because in the short-term, the price is retracing. However, this is a natural move for an asset that pushed 42% overnight on Oct. 25.

As long as the green area holds as support and the price is moving above the 100-Week MA and EMA, investors don’t have anything to worry about. In fact, a potential bullish cross of these two moving averages is likely to occur, which was also a bullish signal in the previous market cycle.

Total market cap copying the movements from February 2019?

Total crypto market capitalization daily chart. Source: Tradingview

Total crypto market capitalization daily chart. Source: Tradingview

This chart is showing a clear breakout of the cryptocurrency markets at the end of October, as the falling wedge broke upwards. The bullish divergences were similar to the breakout in December 2018, which marked the bottom of the bear market of 2018.

Right now, consolidation is needed and backtesting levels must flip to become support. As the chart shows, the red area around $220 billion must turn into support to continue the bullish trend.

Another similarity with February 2019 is that a significant retracement also occurred before continuing to the upside.

Smaller time frames show that downtrend remains

BTC USD 3-hour chart. Source: TradingView

BTC USD 3-hour chart. Source: TradingView

Smaller time frames still show that the downtrend since Nov. 5 is still intact. Additionally, previous support levels are now becoming resistance.

For example, $9,050 was broken as support, which caused the price to drop to the next support level at $8,700. This leads to a retest of the previous support at $9,050, only to confirm that it flipped to become resistance.

In downtrends, this is a continuous movement and, unfortunately for the bulls, this is still occurring on the smaller timeframes.

Bullish scenario

BTC USD bullish scenario. Source: TradingView

BTC USD bullish scenario. Source: TradingView

Therefore, bulls must break out of this downtrend, preferably with a double bottom confirmation or bullish divergences. After that, a breakout above $8,700 is needed in order to flip that resistance level into new support.

The yellow zone is crucial here and needs to hold (as this is also the golden ratio), followed by a clearcut break of the $8,800 area, preferably with high volume.

Bearish scenario

BTC USD bearish scenario. Source: TradingView

BTC USD bearish scenario. Source: TradingView

Nevertheless, as short-term momentum is still favoring bears, a continuation of the downtrend is more likely to occur. In this regard, a few scenarios are possible for a bearish outlook, which both lead to the same lower level.

In the first scenario, the price is unable to break out of this short downtrend and falls below the yellow zone and golden ratio. A potential bounce upwards could then provide a short opportunity. However, testing the green area around $7,400 is most likely to occur in such a move.

BTC USD second bearish scenario. Source: TradingView

BTC USD second bearish scenario. Source: TradingView

The second scenario has the same conclusion as the first one, but a different approach. Here, the price is able to break out of the downtrend but lacks volume and is not able to go beyond $8,700. Such a fakeout often leads to a sharp dump during which bounces will also provide some good opportunities for shorting.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Cointelegraph By Michaël van de Poppe , 2019-11-16 13:54:00 ,

Source link

Leave a comment

NewsBlock © 2019 - 2020 All rights reserved.

NewsBlock © 2019 - 2020. All rights reserved.

While Bitcoin’s price seemingly moves without rhyme or reason — collapsing by dozens of percent and embarking on face-melting rallies on a whim — the cryptocurrency market is filled to the brim with fractals.

Related Reading: Analyst: Bitcoin Price Likely to Fall to Low-$8,000s as Chart Remains Weak

A brief aside: A fractal, in the context of technical analysis and financial markets anyway, is when an asset’s price action is seen during a different time. This form of analysis isn’t that popular, but it has proven to be somewhat valuable in analyzing Bitcoin.

One recent fractal popularized by a well-known cryptocurrency trader is implying that BTC is going to return to the low-$7,000s in the coming days.

Bitcoin Fractal Implies Retracement to Low-$7,000s

A well-known crypto trader going by “Tyler Durden” on Twitter recently posted the chart below, which shows that a Bitcoin price fractal may be playing out. The fractal has four phases: horizontal consolidation marked by one fakeout, a surge above the consolidation phase, a distribution, then a strong drop to fresh lows.

If the fractal plays out in full, BTC could reach the low-$7,000s again, potentially as low as $7,100. This would represent a 20-odd percent collapse from the current price point of $8,800.

It isn’t only a fractal that is hinting Bitcoin has the potential to visit its lows. As we reported on Saturday, Bloomberg believes that if the GTI Vera Convergence Divergence Indicator flips red, a downtrend could push the cryptocurrency back to $7,300.

Related Reading: Stephen Colbert Pokes Fun at Bitcoin in Monologue: Mainstream Gone Wrong?

Can Bulls Step In?

But again, many believe it is irrational to have such bearish interpretations of the cryptocurrency’s chart at the moment. As reported by NewsBTC earlier, Popular crypto trader Mayne recently noted that the “people waiting for $6,000” are irrational. He quipped that Bitcoin retracing and consolidating after its fourth-biggest bull move in history ($7,300 to $10,500, a 42% gain) is perfectly par for the course, but noted that it’s totally possible we can go lower from $8,800.

The medium-term technicals support this.

Trader and CoinTelegraph contributor FilbFilb found that by the end of November or start of December, the 50-week and 100-week moving averages will see a “golden cross,” which he claims is far more significant” for the Bitcoin market that other technical crosses.

Also, a Bitcoin price model created using Facebook Prophet machine learning found that the leading cryptocurrency is likely to end the year at just over $12,000. What’s notable about this model is that it called the price drop to $8,000 months in advance, and forecasted a ~$7,500 price bottom for BTC.

To put a cherry on the cryptocurrency cake, Crypto Thies observed that when Bitcoin bottomed at $7,300, it bounced decisively off the 0.618 Fibonacci Retracement of the move from $3,000 to $14,000, which correlates with the two-week volume-weighted moving average. He added that summer 2019’s consolidation was marked by Bitcoin flipping major resistances into support levels, implying that a bullish reversal and subsequent continuation is likely possible in the coming weeks.

Featured Image from Shutterstock

Nick Chong , 2019-11-10 12:00:38

Source link