Last week's predicted market-wide head fake came to fruition and crypto finds itself in no-man's land currently, ricocheting slowly off various moving averages and zones of support/resistance.
The short version is: everything's likely to move sideways for a while, let's take a look.
After pinging around between the support/resistance zones we identified last week, and a brief low volume head fake north of that zone, BTC has finally hit our T1 target from back then, which is the 50 day moving average (blue here) which is providing strong support.
Right now price action is sandwiched between that and the 100 just above (yellow). Both of those moving averages are pointing sideways, which gives us an overall clue as to the market direction short term.
Lowering our eyes to the oscillators below the chart, RSI (top) has just rejected the 50 mid-line which is usually bearish, and MACD having crossed bearishly shows momentum is swinging down for now. So we're highly likely to continue to bounce around between these moving averages for a while in my view.
Caveat: a break of the 50 day would put a much more bearish slant on things.
I'm including a zoomed-in 4-hour chart really mainly for those interested in seeing the forces of support/resistance at work in more detail. The 50 day (blue dotted here) is clearly support, and the prior support zone just above is now acting as resistance. With momentum tracking sideways this is a setup built for fans of ping pong.
Stepping into the Time Machine, let's see what happened next back in 2014.
So far the parallels are holding nicely, but they may be about to diverge.
At this point in 2014 the blue 50 day moving average was pointing upwards, and about to cross through the yellow 100 day, causing another push up to test the 200 day moving average (red) - ultimately concluding in a false 50/200 bull cross and ultimately many a broken heart when that proved not to hold soon after.
In 2018, however, the 50 and 100 are parallel, implying we're not ready to have another go at the 200 quite yet. Arguably this is more bearish, but momentum is just saying sideways.
A reminder that the death crosses remain in place market wide, and they taken alone give us an average historical BTC target in the $4k range.
Ethereum typifies the opposing forces that point to sideways here.
On the one hand the head fake we predicted last week was nicely confirmed with a blast of selling volume (red arrow) showing the real market sentiment still isn't ready for liftoff. This is reinforced by a 100/200 MA bear cross (yellow over red) and an MACD bear cross (oscillator below the chart).
However, the 50 day (blue here) is pointing up.
So in short. I think tracing sideways along the 200 day, or at the most bearish slipping into the channel between the 50 and 200 is the most likely next step this week.
Our double top (blue arrows) was neatly confirmed with a move back under the 200 day and a spike of selling volume. MACD has crossed bearish, RSI has rejected the 50 line.
The 50 day MA (blue) is providing support though and volumes are low, so again some general range trading between the 50 and 100/200 just above likely.
A similar story with Litecoin. Back under the 200 day (red), seeing support from the 50 (blue) everything pointing sideways. Volumes low = indecision.
The little red arrow I've added is just to remind us all of the potential sword of damocles still hanging over us from the market-wide death crosses (50 day crossing over 200 day moving average), despite all the early-summer frivolity of late.
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 MD of British music production company Poseidon. He began studying technical analysis in 2000 for use in managing his own investments and due to its overlap with behavioural economics – much used in Poseidon's international marketing work. This has seen the company achieve three iTunes US number one albums in as many years among other notable successes.
A Bitcoin investor since 2013, Jon and has been providing Technical Analysis (TA) commentary for a private community of Cryptocurrency investors since mid 2017.