If it feels like last week's optimism has been replaced by a degree of uncertainty as to 'where next?' among pundits, this is perfectly reflected in the charts; after a high volume rejection of the 200 day moving average last week, the main cryptos have been floating sideways/slowly up on low volume and decreasing momentum.
Sideways (non-trending) markets are the trickiest to chart, as they are more chaotic than trending markets - nonetheless here's my current take:
I'm charting Coinbase today as it has a slightly clearer technical picture than the other exchanges. Last week BTC touched the 200 day moving average (red here) from below, and rejected it on extremely high volume. This is bearish action, and certainly took a lot of the wind out of the bulls' sails. Yet, perhaps counterintuitively, the price has continued to drift upwards since.
Let's have a look at what's going on close-up.
A tale of two wedges
Last week's top was a blow-off out of the top of a bearish ascending wedge, showing diminishing momentum as the price climbed. NB: On Coinbase the blow-off didn't quite reach the 200 day moving average, as it did on Bitfinex.
The high volume rejection of the 200 day caused downwards momentum which was then stopped short by the 200 day exponential moving average (dotted red here - an alternative, more responsive version of the 200 day moving average often used for tech stocks).
The rebound from the 200 EMA was low energy, like the 2nd ricochet of a bullet, and has resulted in a slower-moving upwards bearish wedge across all of the markets.
So, some latent momentum upwards still remains - to be expected as sentiment doesn't tend to turn on a dime - but it's increasingly fading.
My feeling is that the most likely conclusion in the near term is further sideways action, scraping along between the 200 day moving average and the 200 day EMA. This is what happened in 2014 at this point, before eventually bears stepped in and pushed prices much lower.
The dual-wedge setup is even clearer on Ethereum, complicated only by ETH having made it over its 200 day. Since BTC hasn't - and still determines market sentiment - a big pinch of salt merited. Volume and RSI are looking non-committal.
Ripple printed a neat double top last week, which will be strong resistance when price gets there again. Similar momentum picture to BTC and ETH, so I think it's unlikely to get that high short-term.
Litecoin typifies the muddy waters at the moment. On the one hand we have a clear rejection of the 200 day moving average followed by a bearish ascending wedge, making this is a 'sideways-down' picture.
On the other hand that wedge could be interpreted as having a flat top, which would make it a more bullish pattern. This is true of a number of the other coins/charts, which are a touch ambiguous.
This ambiguity is the bulls' best hope short-term. However, when waters have been stirred up, it can be good to return to simple truths: BTC is still under its 200 day moving average, so this remains a bear market until otherwise proven.
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.