Just like Maverick and Goose in Top Gun, BTC is flying right into the danger zone today. Although this is likely to be painful in the short-term, this is actually what the market needs to start thinking about forming a proper bottom.
So, aviators on, let's take a look.
Yesterday's move down was on unusually high volume - especially intraday, with most of the move happening in a single 4 hour spike down. This is the most volatility we've seen for a while. Bears have armed their missiles.
This has moved BTC right onto the upper blue dashed line that has been acting as our main support since the December top. With price compressing to the downside we can draw any number of descending triangles onto this chart (flat bottom, sloped top), giving this a bearish tint indeed and putting pressure on that support.
Over on the right I've added a colourful 'volume profile' indicator, showing volume traded at each price level historically. This allows us to see zones of support and resistance below this support level clearly. As you can see there was very little trading volume in the area just below. If, as I suspect that gives way and we enter the marked 'danger zone' we're likely to see fast moves and some panic.
High volume panic bottoms, ironically, are where capitulation and hence long-term bottoms are born, so ironically I see this as something the market needs to do to move higher.
Supporting the bearish case, RSI (just under rate main chart) has rejected the 50 line, and MACD has crossed bearish again.
Targets for such a move would be the former downtrend (green), then historical price-level support at $4637. Excitingly this would accord with the Death Cross target, and put us into our very long term uptrend channel (marked in purple here), which is where I'd be comfortable starting to build a bullish case.
What case could the bulls make here meanwhile? Well RSI is oversold, and we're still above that blue support level. Otherwise I fear they need to watch their sixes.
Since BTC will likely dictate the next move for all the coins, I'm focusing on how the 'danger zone' looks on the other coins today. On ETH the gap is down to around $350, which would be next support. Note that ETH is still above its 50 week moving average (yellow) giving bulls cause for hope - but also has the same RSI and MACD bear signals flashing.
As I discussed last week the danger zone on Ripple is a bit epic. I'd expect a swift move down to $0.27 on a BTC break of support.
LTC has now broken its 50 week and unlike the others is slightly below support already. Its danger zone is small however, with target support at $74.
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.