So far our bottoming hypothesis is holding up. Altcoins overshot their targets somewhat, but BTC didn't budge, maintaining that important divergence - and has been edging higher, causing altcoins to bounce hard.
However we're not quite out of the woods yet – although the BTC daily chart remains bullish, gaps in the various coins' charts are proving tough resistance and one in particular has been proving quite the obstacle – let's take a look.
MACD has crossed positive and Bitcoin has been scraping slowly upwards along the top of the super-long-term uptrend channel (see here). So far so simple, zooming in however tells a far more complex story.
On this hourly chart you can see the long-term uptrend (purple), which is slowly lifting prices. However, Coinbase specifically had big issues with their BTCUSD order book on 10th August and I'm guessing this was involved in the nasty gap in their hourly chart (shown here in orange) which has been playing havoc over the last week.
Gaps are the strongest form of resistance/support as they mark points where traders were trapped in positions they didn't necessarily want. BTC bulls have made at least 10 separate assaults on that area (which covers $6475 - $6545 on Bitfinex), each one being rejected.
Meanwhile the higher lows from the long term uptrend have been pushing BTC into an ever-reducing space. Although this may resemble the compactor in Star Wars, this setup is bullish while we remain over that uptrend.
I wanted to draw your attention to how similar the current action on ETH is to the April bottom:
- Hammers, while oversold
- MACD bull crossing
- After the bull cross, ETH initially pops (big green candle), then retraces just as aggressively.
Pullbacks just on or after an MACD bull cross are common, so this fits. First though there are gaps to conquer.
ETH has its own gap which first appeared on Bitfinex – I'm guessing all of the exchanges were under some pressure given the panic. It also overshot our target of $305. Old support becomes new resistance, so ETH has been banging off that level since. It managed to get higher on the 18th only to run into the gap above.
Slightly concerning me is that this action resembles a head and shoulders top (blue arrows). We need to watch the light green support line closely ($283). A break of that would see us retest the lows around $250.
Of course if BTC bulls get their act together the chances are everything will be whisked over these gaps/resistance lines.
XRP has been a trader's dream this last week, bouncing over 50% off the lows trough to peak, retracing and then doing a partial repeat. Each advance was halted by the former downtrend (dashed blue here) which has been proving resistance since. Zooming in.
I've annotated this more than usual as it's such a beautiful chart from a TA perspective.
Over on the left we have XRP's own gap, which was strong resistance initially.
The blue arrows mark an inverse head and shoulders bottom with the start of the gap as neckline. When this was broken on Friday night XRP went parabolic into the resistance-free zone, perfectly hitting the target predicted by the inverse head-and-shoulders.
Since then it has been retracing down the former downtrend (blue dashed). So now it's sandwiched between the gap top and that downtrend. We're relying on BTC bulls once again to break it out of this range; if that happens I expect XRP to move straight to $0.43
Nothing to say here other than how similar the retrace has been to the ETH retrace pattern I pointed out above. Same story, it's on BTC to make the next move.
Similarly on LTC we have the makings of a bearish inverse head and shoulders top. Support in green at $55. A break of that would see a retest of the lows.
BCH perfectly hit our $600 target. It's now sandwiched between that and support around $450.
Target (that we already hit) in red at the top. Yet another gap. We're currently back below it so this is likely to prove further resistance.
In summary then the entire market now needs BTC to shake free of resistance, until then everything’s in limbo.
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.