BTC’s tentative steps out of the main descending wedge continue, with some action very familiar to veteran BTC watchers – the confirmation of a secondary, higher downtrend across the peaks.
Last week we talked about the tentative first steps BTC was taking to the right of the main downtrend. This hesitance has continued, with another test of the 50 day moving average (blue here) followed by a gentle, low-volume selloff midweek which again found support at the previous uptrend (blue).
That rejection of the 50 day MA also reconfirmed a possible second, higher downtrend across the peaks from Feb (blue dashed).
Usually, when drawing trend-lines we are looking to represent the average sentiment in the herd – which when summing millions of market participants’ emotional responses become somewhat mathematically predictable. This is why we choose the line with the most touches, and try to see through head-fakes which are outliers.
Some chartists however will just draw across the extreme peaks, and this line then becomes a self-fulfilling prophecy for technicians, acting as a second weaker ceiling for the action. We saw exactly this happen earlier in the year on BTC.
BTC’s being pushed into the apex between the blue uptrend, that new blue downtrend, and the 50 day moving average - so if you're wondering why all seems quiet on the western front, that is the reason - volatility almost always drops in the apices of triangles.
A break above the new downtrend and 50 day moving average are likely to be the catalysts for larger strides (or below the blue uptrend, although that seems unlikely) - and I can’t see that taking more than a week from here given this set up.
Of course BTC seems to have developed chronic indecision of late, so don't be shocked if it finds some new reason to dawdle meanwhile!
ETH is looking rather more decisive – it tested the 50 day moving average and stopped on a decent-volume shooting star – and has since been consolidating exactly on that moving average (blue), reinforced by the support line just below (green dashed).
RSI is a little above the centre line and MACD is favouring bulls currently, so this is a moderately bullish chart, albeit one which needs to overcome the 50 day MA before further progress can be made.
XRP is our most bullish chart today – having formed a bullish ascending triangle at the 200 day moving average (red). I said last week I wouldn’t be surprised if XRP lead crypto out of the doldrums – and that view still holds. Targets remain as per last week.
Litecoin is our least reassuring chart today, with a clear rejection of the 50 day MA (blue) at a band of resistance and a subsequent dribble downwards causing MACD to threaten to turn lower, potentially putting the momentum ball into the hands of the bears.
Saying that, volumes are negligible, showing little appetite from bears so far (perhaps they know winter is over..) and in general low-volume retests of former downtrends from above are often predictive of more confident breakouts - so while the action remains above the blue downtrend this remains just a breakout that’s consolidating.
BCH is similarly threatening an MACD bear cross after correcting nicely after its run. However the weakening volume on the pullback is again reason to take heart.
So in short, the ball looks to be in BTC and XRP’s court – everything else is consolidating or drifting lower without conviction waiting on the bandleaders to strike up.
If XRP keeps the promise of the ascending triangle, and/or BTC breaks over the 50 day moving average, I think we’ll soon see the market break this new glass ceiling, and with it will come larger strides.
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 correctly 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.