Bitcoin has been submitting shorts to a classic test of nerves in the last week, with what so far looks like a feint upwards. The prognosis is still lower however; our BTC targets remain unchanged: $5000 in September, $29,000 by January 2020.
Let’s take a look.
The last week’s small rally, in context against the 50 week moving average (superimposed in yellow here). This looks like a test of the underside of that moving average. Volume has been dropping as it’s risen; bulls are running out of steam. With heavy resistance just overhead the chances of this pushing higher look slim. The only thing in the bulls’ favour is the MACD bullcross, marked - but when these are below the zero line on MACD they can simply be an asset writhing during its bear market, so I’m not taking that as a strong signal.
Zooming into the 4-hour chart (each bar is 4 hours), we’ve had an attempt at an inverse head and shoulders bottom (blue arrows) from bulls. These need confirmation from a surge of volume as price breaks over the dashed blue neckline to be valid signals, but instead we’ve seen declining volume. Price then ascended in a bearish wedge, knocking on the 50 week MA just overhead. This isn’t a bullish chart.
What would negate the continued bearish outlook? Volume from the bulls, simply. Until we see that, the path of least resistance (quite literally), is down.
Something we’re seeing on a bunch of the big cryptos is a test of the 50 RSI line (the mid-line). Added here in blue dashed. This can act as resistance - while we are below it we are in a bear market. This throws the recent head fake over the 200MA (red) into perspective.
As you can see ETH is rejecting 50 RSI currently, as well as showing a similar declining volume ascending wedge. Another retest of the 50 week (yellow) seems likely.
Ripple too is testing its 50 RSI level. This remains a bearish chart. A reminder that a break under 0.47 will likely see a very swift move down to 0.299 support (marked).
LTC is looking weaker than we’ve seen for ages, being so close to the 50 week (superimposed in yellow). It’s still at strong support though (upper green). If that gives way, it has a decent safety net from the next support close below at $93. For that reason this remains the lowest risk of these 4 currencies from a TA point of view.
BCB Group has no position or opinion on the price of Bitcoin or any other cryptocurrency and this article should not be construed as analysis of or advice regarding the current or future market price of Bitcoin or any other cryptocurrency. No analysis of the price movements of BTC or any other cryptocurrency or any other asset provided by BCB Group should be construed as an invitation or inducement to buy, sell or otherwise to trade BTC or any other cryptocurrency.
Strategy and Execution Partner
Jon is MD of British music production company Poseidon. He began studying technical analysis in 2000 for use in managing his own investments and due to its overlap with behavioural economics – much used in Poseidon's international marketing work. This has seen the company achieve three iTunes US number one albums in as many years among other notable successes.
A Bitcoin investor since 2013, Jon and has been providing Technical Analysis (TA) commentary for a private community of Cryptocurrency investors since mid 2017.