Bitcoin’s 15-percent recovery from the 14-month low hit yesterday may have opened the doors for short-term price consolidation.
The leading cryptocurrency by market value dropped through the support of the trendline connecting the August 2015 and August 2016 lows and fell to $3,474 yesterday – the lowest level since Sept. 17, 2017 (prices as per Bitstamp). At that level, BTC was down 38 percent from the highs above $6,300 seen two weeks ago.
The drop was short-lived, however, and prices closed yesterday (as per UTC) at $3,939 – well above the trendline – validating the oversold conditions reported by the technical indicators. As a result, a bout of consolidation could be in the offing.
At press time, BTC is changing hands at $3,920 on Bitstamp, having clocked a high of $4,069 earlier today.
The 15 percent recovery, though, may turn out to be a “dead cat bounce” if the long-term trendline support, currently at $3,830 is again breached. Meanwhile, the prospects of a stronger corrective rally would improve if prices find acceptance above $4,000.
The bullish divergence of the relative strength index (RSI) and the falling channel breakout in the 4-hour chart indicate a bearish-to-bullish trend change. As a result, a stronger recovery rally toward $4,461 (downward sloping 50-candle EMA) cannot be ruled out.
Gains above that level may remain elusive as the stacking order of the 50-candle EMA below the 100-candle EMA, below the 200-candle EMA indicates the path of least resistance is on the downside.
Over on the daily chart, the RSI has created a bullish divergence (higher low). That pattern would gain credence if the RSI moves above 30.00 into the undersold territory.
The primary trend, however, would remain bearish as long as both the 5- and 10-day EMAs are sloping downwards.
As seen in the above chart, BTC is now trapped between the former support-turned-resistance of the 200-week EMA, currently at $4,174, and the three-year-long rising trendline support. Acceptance below the trendline support of $3,830 would invalidate the signs of revival seen in the 4-hour and daily chart.
- BTC’s defense of the long-term trendline support could be a sign the sellers have run out of steam. As a result, prices could consolidate around $4,000 for the next day or two.
- A break above the psychological hurdle of $4,000 would add credence to bullish setup on the 4-hour chart and open the doors to $4,500.
- On the downside, a move below $3,830 (trendline support) would allow a re-test of yesterday’s low of $3,474.
Nov 25, 2018 at 11:00 UTC
With bitcoin prices dropping further early on Sunday, the cryptocurrency now looks to be heading for its worst weekly loss in over 5 years.
At press time, the leading cryptocurrency by market capitalization is trading at $3,520 on Bitstamp, representing a 36 percent drop from Monday’s opening price of $5,553. Unless the bulls can pull off a recovery, it’s looking to be the biggest weekly drop since the second week of April 2013, when prices fell 44.8 percent from $165 to $91.
For the weekly loss to be confirmed on the charts, BTC must close today (as per UTC) below $3,887, or the resulting weekly loss would be the second biggest of 2018 – the first being the 30 percent drop witnessed in the last week of January.
Bitcoin’s weekly performance
The 33-percent price drop is looking overdone, as per the 14-day relative strength index (RSI). The market, however, is paying no heed to the oversold conditions reported by that technical indicator.
This is evident from the fact that BTC has continued to find sellers in the last 11 days, despite the record low reading on the RSI.
BTC’s inability to produce a stronger corrective bounce despite oversold conditions indicates the “buy-the-dip” mentality is largely absent.
As seen above, BTC is currently trading below $3,760 – the support of the trendline connecting the August 2015 and August 2016 lows.
A close below that level would bolster the already bearish technical setup, as represented by the convincing move below the 200-week exponential moving average (EMA) support and the downward sloping 5- and 10-week EMAs.
- BTC could drop to the 200-week simple moving average (SMA) support of $3,126 if prices close today below the ascending trendline support.
- The bearish momentum, however, may weaken in the next few days, as the 14-week RSI is closing on oversold territory (below 30.00) for the first time since January 2015.
- The outlook as per the weekly chart would remain bearish as long as the 5- and 10-week EMAs continue to trend south.
Nov 24, 2018 at 23:29 UTC
Bitcoin (BTC) Falls Under $4,000 Support On A Dime
After days of stagnating at the $4,200 price level, on Saturday afternoon (EST), Bitcoin (BTC) suddenly fell under $4,000, a highly-touted level of support for the cryptosphere’s foremost asset. It wasn’t clear why this bout of selling pressure occurred, but within minutes, sell-side orders pushed BTC (on Coinbase) under $4,200, then $4,100, then $4,000, all the way to $3,800, where the digital asset is situated at the time of writing.
Although this is worrying, in the short-term, it seems that a temporary floor (of sorts) has been found at $3,800, another key level mentioned by crypto traders incessantly. Again, while many have speculated, it is unclear whether there was a catalyst that triggered this sudden loss of support, sending BTC plummeting into its third freefall in a week’s time.
Still, many believe that this rapid 10% loss can be chalked up to a number of supposed catalysts: the aftermath of the Bitcoin Cash’s November 15th fork, an influx of institutional selling orders, the Bakkt Bitcoin futures vehicle delay, regulation measures from the SEC, and, arguably the most convincing, the final bout of capitulation from crypto’s “weak hands,” so to speak.
Crypto’s leading commentators took to Twitter to comment on this market movement, which comes just a day after Black Friday and in the middle of American Thanksgiving Weekend.
I must admit, I never thought we would see this again..
Ran NeuNer, counteracting his undying bullishness on this asset class’ prospects, exclaimed that he didn’t expect to see BTC foray under $4,000 ever again, evidently referencing his sentiment that a bull run is around the corner.
Bitfinex dropped it to 4k/USDT right as the premium hit 7%. I guess they may be trying to keep the premium below 7%.
Bitfinex’ed, the de-facto king of crypto critic, cut out some time to tout his anti-Bitfinex sentiment amid the move lower, claiming that it was suspicious that the exchange’s premium hit 7%, just as BTC hit $4,000.
Steven Zheng of The Block retweeted an image he sent in jest, which highlighted an alert for when BTC capitulates under $1.00, a nonsensical price target, hence the joke.
The fact of this most recent move lower is that many believe crypto’s bear market isn’t done yet, or at least not until a bottom of $3,000 is reached, as claimed by many traders, including Tone Vays, Anthony Pompliano, and other lesser-known, yet knowledgeable industry analysts.
Speaking to CoinTelegraph, Pompliano noted that psychological arguments point towards the fact that there hasn’t been enough pain yet, meaning that a true bottom/capitulation phase hasn’t been achieved yet. The Morgan Creek Digital Assets executive, a centralized bank hater, then explained that from a technical standpoint, $3,000 to $4,000 per BTC is a likely possibility.
From a historical perspective, Pomp also explained that a $3,000 price bottom could also be logical, noting that historically, Bitcoin’s drawdowns have been 80%+, before adding that this year’s has ‘only’ been ~75%.
Keeping this in mind, $3,000, or an 85% decline from 2017’s all-time high, could be in Bitcoin’s short-term cards, so to speak. Vays closely echoed this sentiment, explaining that $3,000 is a price point to watch, telling CoinTelegraph viewers that once BTC reaches the $3,000 zone, it would be a good idea to start accumulating.
Nov 23, 2018 at 11:29 UTC
Bitcoin’s defense of key long-term support for the second time in four days is a positive sign for a potential recovery rally.
The leading cryptocurrency by market value fell below $4,242 (low of Wednesday’s inside-day candle) in the Asian trading hours, putting the bears back into the driver’s seat. As a result, BTC fell below the 200-week exponential moving average (EMA) of $4,182 earlier today.
The breach of the EMA support, however, may have trapped the bears on the wrong side of the market, as BTC is currently trading at $4,330 on Bitstamp, having clocked an intraday low of $4,061 earlier today.
It is worth noting that the long-term EMA was first breached on Tuesday. The subsequent sell-off, however, ended at the 14-month low of $4,048 and prices recovered to $4,500 on the following day.
The repeated failure to beat the long-term support indicates the bears have likely run out of steam. As a result, a stronger corrective rally could be in the offing.
On the 4-hour chart, the relative strength index (RSI) has created a bullish divergence with higher lows.
As a result, BTC looks set to test $4,635 – the neckline of the double-bottom bullish reversal pattern. A break above that, if confirmed, would open up upside toward $5,100 (target as per the measured height method).
As seen above, the 14-day relative strength index is holding below 30.00 for the ninth day straight, signaling ongoing oversold conditions.
The 5- and 10-day EMAs, currently at $4,546 and $4,933, respectively, are still trending south. Therefore, corrective rallies above the 10-day EMA, if any, could face exhaustion near $5,000.
- Repeated defense of the 200-week EMA likely indicates seller exhaustion. (edited
- A break above $4,635 would confirm a double-bottom breakout on the 4-hour chart and could yield a stronger recovery rally to $5,100.
- A weekly close on Sunday (UTC time) below the 200-week EMA of $4,182 could prove costly, as the next major support is located directly at $3,100 (200-week simple moving average).