After correcting slightly earlier than expected, BTC pulled back aggressively last week - and then also stopped rather earlier than expected, forming a new uptrend from the June lows. If this is confirmed as a turning point over the next 48hrs it’s encouraging behaviour; dampening/reducing oscillations show we're nearing the end of this trading range. Meanwhile, the alts are also hinting at a bottom here.
The last 3 weeks' action makes a lot of sense in hindsight: the uptrend from the Aug 13th low formed a bearish ascending wedge, a pattern which tends to correct aggressively.
This rally sold off $100 underneath our $7500 first target, forcing a slight redraw of the large purple downtrend, recasting the July peak as a small head-fake.
Combined with the lower purple trendline we have a lovely big bullish pennant now confirmed, and are seeing ever-reducing oscillations within it. While price remains within this 'purple pennant' (bottom $5877 currently) the picture remains bullish overall.
As shown by the green arrow, the descent was stopped by a trendline from the lows (red), which is now new support. If this continues to hold then we may see an exit from the purple pennant sooner rather than later. There are a few clues on BTC and among the other coins that it might.
Zooming in to the 4hr gives us clue 1: RSI and volume divergence the last 3-4 days (blue arrow on the RSI oscillator). Divergence like this shows reducing momentum and often precedes a reversal.
We are in effect currently having a good go at mirroring the action at the August bottom, only at a higher price point.
ETH has been scaring the wits out of HODLers this week by dropping precipitously beneath all major support (green dashed being the last decent support). Despite this however, some bullish divergence is visible on the RSI (first oscillator under the main chart) - but it's definitely not a confirmed bullish signal yet.
Pulling out to a weekly chart, the volume gives us another hint we may be attempting to bottom – scanning left, every time volume has been this high during a down-move since 2017 ETH has bottomed. Major caveats however: This isn't a huge dataset, and RSI isn't oversold yet, plus we're under all decent support until around $91. This is a falling knife until absolutely confirmed otherwise.
Ripple is back at very strong support and the divergence is once again apparent – this time in the form of a possible double bottom. Given the support just below this is quite a compelling chart and once again my favourite of this bunch alongside BTC.
A similar story for LTC – possible double bottom here, indicated by the arrows. We're back below the big resistance/gap congestion zone which we fought so hard to escape from, and arguably under our strongest support, so like ETH this is a hint only and requires confirmation to be sure.
More divergence visible here, hinting that the market is putting the brakes on the descent. A falling knife until confirmed, there's also quite a lot of support just below, the next being $454.
To summarise then, currently I'm seeing the action as further hints that we've bottomed:
- BTC is still making higher lows, and trading into a reduced trading range further solidifying a bull pennant.
- Alts are retesting their lows with either potential double bottoms or slightly lower lows with RSI divergence.
- The BTC/alt divergence so important in thinking the market has bottomed (albeit with lots of volatility remaining) remains intact.
- ETH is a special case due to ICO liquidations - those who held ICOs paid in Ethereum being forced to cash in due to reduced working collateral. This explains the peculiarly weak picture for ETH.
My suspicion is we may look back on this period as an outstanding bargain – but technically that's not confirmed yet.
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.