Bitcoin's rally from the lows has made good progress, and the daily chart looks like it has further to run - however volatility is high with fear and greed still alternating, and short-term a pullback looks on the cards.
Meanwhile alts are a mixed bag, with some still trapped in trading ranges near the lows - showing that these are still tentative steps for our new bull market, and with short interest hopping around plenty of doubt remains in the air.
Given the volatility we've seen over the weekend. I wanted to start today by pulling out to our long-term uptrend channel chart, just to remind us all of where we are (probably) in the cycle.
I revised this picture last week, adding two 'lanes' to the channel; the dashed centre line has been acting as support, which you can see in the action at the recent low.
Meanwhile the most crucial shared feature with the 2014 bottom is the breakout from the dashed downtrend from the highs and then a return to 'retest' that downtrend from above, before continuing – a classic bullish breakout with confirmation then and similar now.
There is one major difference between now and 2014, which while not necessarily an issue, we should talk about: At this point in the 2014 breakout, BTC had already printed a higher high (compared to the last peak before it broke above the downtrend). That's not the case currently (yet), so our modern bulls still have a little work to do to solidify the breakout.
A new bull market isn't confirmed until we've printed both higher lows and higher highs - and of course have seen a bull cross (50 day moving average crossing back over 200 – more on that below).
Pulling in to a daily chart of the current action, with the long-term uptrend channel still showing in purple shows a rather busy chart, but bear with me.
BTC has made it above the most difficult resistance lines (green), and the 50 and 100 day moving averages (blue and yellow).
With RSI and MACD both lovely and bullish, theoretically this is a perfect setup for a continuation to Target 1 (T1 on the chart, the former downtrend from the highs), and T2 (the all-important 200 day MA).
To totally confirm the new bull market we need the action to break both of those targets and also break the dashed red line around $8200, giving us a higher high. Will BTC manage to do all of that in one go? Unlikely. I think we'll see at least one retrace before it does – we've not seen a significant 'zag' yet, only one big zig...remember nothing goes up in a straight line (except maybe Doge).
Meanwhile, honourable mention to the 50 day moving average (blue) which is starting to curve upwards towards the 200 day (red). A cross of those two is the other sign we need for full confirmation a bull market is back.
Zooming in to a 4 hour chart (each candle is 4 hours), shows some significant divergence appearing (red/red dashed arrows): MACD and RSI are both lower despite the higher high on BTC.
Add that to the MACD crossing bearish and we are likely due a swing lower here, to retest the channel bottom and the support at $7046. This is nothing for bulls to be alarmed about unless $7046 support fails (especially if it is backtested and fails again).
ETH finally broke out of the decision triangle it's been sitting in, although volume on the breakout wasn't conclusive. It's now pulled back to the top of the triangle, and on BTC weakness I'm expecting to see a retest of at least the middle of the triangle around $280. Meanwhile with the gap above (yellow) and green resistance are still to conquer. Given the current small torrent of negative-sounding ETH FUD in the press, I'm expecting it to linger in this zone for a while longer. A break of $270 would be cause to inspect the volume and action closely, as a move lower isn't impossible (but nor is a double/triple bottom).
Here the same RSI divergence weakness is visible (red arrows) showing the bulls aren't fully hitched up to the ETH wagon yet.
XRP bulls have managed to get stuck in a trading range. Some small divergence visible on MACD and RSI between the last two attempts to push over $0.35, but this is just range-bound so I'm not reading anything into this chart currently. It's down to BTC to lead, as ever. My target of $0.45 is right at the very top of this chart in red.
LTC has performed well and made good headway towards the 50 day moving average (blue) which is first resistance. However unlike BTC the downtrend (also blue) still lies ahead to beat, so bulls will be tested fairly soon.
The doubt BTC bulls are having is showing up in a similar divergence, so a swing lower looks likely here too.
Bitcoin cash made some quite amazing progress this week, storming past the gap (yellow) and T1/resistance (red dashed) up to the 50 day moving average.
Overnight it's rejected that, so a swing back to retest T1 from above looks likely here before another assault on that is likely. Note, like LTC, BCH is still under its downtrend (blue here), no breakout confirmation yet. This is symptomatic of the recent underperformance on alts due (in my humble opinion) to capitulation.
So, the picture is mixed – I think it’s likely we've seen the bottom, but bulls still have plenty of work to do to close the deal entirely with a bull cross and higher highs on BTC, until then expect continued shaky first steps.
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 BCB’s head strategist, with an emphasis on market intelligence. An expert in behavioural science and highly experienced chartist, Jon has been providing BCB’s clients with crypto and macro technical analysis since 2017, and has quickly gained a reputation for accuracy after accurately calling the December 2017 top and August 2018 bottom.
Jon is also MD of British music production company Poseidon. He began studying technical analysis in 2000 due to its overlap with behavioural economics – much used in Poseidon's international marketing work, which has seen the company achieve three iTunes US number one albums among other notable successes.