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Bitcoin price (BTC) dropped another 3.07% on Feb. 25, marking the second day of losses as global equities markets sharply corrected on fears of the Coronavirus spreading to more countries.

Crypto market daily price chart. Source: Coin360

Crypto market daily price chart. Source: Coin360

Tweezer tops show supports becoming levels of resistance

The price dropped below what analysts have labeled as crucial support at $9,450-$9,400 to a new 3-week low at $9,281. Similar to the Feb. 18-19 drop from $10,250 to $9,478, today’s pullback was also preceded by a tweezer top candlestick pattern on the daily timeframe.

At the time of writing, Bitcoin price is finding support near the 50-day moving average and the volume profile visible range (VPVR) high volume node at $9,430-$9,319.

BTC USDT daily chart. Source: TradingView

BTC USDT daily chart. Source: TradingView

If the price fails to hold this level then a new lower low below the Feb.4 price of $9,089 is possible. Below $9,089, the next level of support can be found at the 200-day moving average that is also aligned with a high volume VPVR node at $8,800.

Such a move would erase approximately 16% of the 21% gain Bitcoin has made since rising from $8,327 to reach a local high at $10,500 on Feb. 13.

Key $9.4K support broke but traders anticipate a bounce at $9,350

BTC USDT 6-hour chart. Source: TradingView​​​​​​​

BTC USDT 6-hour chart. Source: TradingView

In the shorter time frame, traders will note that the relative strength index (RSI) has nearly dropped to oversold territory and appears to be reversing upward at 35.5. This would suggest that $9,335 could be a point of reversal and the price previously held at the high volume VPVR node at the $9,350-$9,277 zones.

The price of Bitcoin also revisited this zone with 2 previous bounces at $9,335 on Feb. 25 and Feb. 19. Below $8,800, the situation becomes a bit trickier but the price appears to be supported at $8,200 and $8,000.

Coronavirus fears and the overbought conditions weigh on Bitcoin price

Despite the 7.25% pullback of the last two days, it is yet to be determined whether the downside move is technical or primarily driven by the correction in traditional markets which is fueled by Coronavirus fears.

While a few analysts from crypto-Twitter have run for the hills and shouted that a sharp bearish reversal that will break the current uptrend is bound to happen any day now, other analysts like Cointelegraph contributor Micheal Van De Poppe believe that Bitcoin and altcoins had become overbought after the recent multi-week rally which saw Bitcoin price move from $6,400 to $10,500.

Traders looking to buy lower with 76 days still left until the halving

Van De Poppe has long believed that a 10% or larger pullback was needed in order for cryptocurrencies to retest their underlying supports as traders book profits then prepare for the next leg up.

Thus, it is his view that the current uptrend remains intact despite the short-term bearish conditions, which previous reports by Cointelegraph suggest is the result of crypto whales capitalizing on the high number of leveraged longs and overbought conditions within the market.

During a recent conversation with Delphi Digital CFA Kevin Kelly, the analyst explained that:

“This market is still highly speculative and conditions can turn on a dime, but taking a step back we are beginning to see some maturation as the level of sophistication across investors and traders increases.”

Notable Crypto Asset YTD Returns (USD). Source: Delphi Digital

Notable Crypto Asset YTD Returns (USD). Source: Delphi Digital

Kelly referred to the chart above which shows the wide distribution of gains amongst crypto assets since the start of 2020 and explained:

“The latest rally in the crypto market is quite a bit different from what we saw last year when BTC led most alternative crypto assets. The shift in leadership this year has favored other large and mid-cap names, many of which drastically underperformed BTC over the last year.”

Cointelegraph contributor and crypto trader contributor Scott Melker also urged investors to remember that: 

“The assets that are overbought and have had the largest recent gains are the ones that have the furthest to fall before finding meaningful support.” 

Taking a wider view of the market, we can see that the price remains pinned between $9,350 and $9,800 and each previous level of support is now functioning as a level of resistance. At the time of writing, the absence of purchasing volume shows that traders are not viewing the current drop as a ‘buy the dip’ opportunity. 

In the event of an oversold bounce does occur, Bitcoin price could rise the Bollinger Band moving average which is currently located at $9,666 but it’s also possible that the previous support at $9,650 will function as a tough level of resistance. 

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 Horus Hughes , 2020-02-25 23:15:00 ,

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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

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