Shortly after topping out at $10,938, Bitcoin sharply reversed course and traders were left to speculate whether Federal Reserve Chairman Jerome Powell’s Bitcoin comments put a damper of the bullish price action. Or perhaps the advent of Bakkt’s (physically delivered) Bitcoin futures contracts was repeating the CBOE/CME Bitcoin futures product that launched to much hype right at the peak of the 2017 monster rally.
Let’s take a look at the current price action and see if we can determine what Bitcoin is up to.
BTC USD Daily Chart. Source: TradingView
The recent move from $9,350 to $10,800 brought Bitcoin price above the 50-day MA. Previously, it was pinned between the 50 (black) and 100 (orange) day MA.
As BTC made a strong run at $11,000, a spike in bear volume crushed BTC but buyers stepped in and absorbed the dump. BTC is maintaining the range it’s been in for the last week abd $10,500 now acts as resistance whereas previously it functioned as a support.
BTC USD Daily Chart. Source: TradingView
The 12 EMA (black) and 26 EMA (orange) are also on the verge of converging and a move to $11,000 brings BTC right against the upper trendline of the wedge.
$11,091 (X) could act as resistance and a spike in bull volume could push BTC as high as $11,450.
A move to $12,033 would place Bitcoin at the 61.8% Fibonacci retracement level from the $13,800-$9,067 retrace.
If BTC price breaks below this point, there is soft support near $10,250 — a point which also lies near the 50% Fibonacci retracement level.
BTC USD Weekly Chart. Source: TradingView
Short term bearish but long term market structure and sentiment are bullish
On the weekly time frame, BTC regained the 12 EMA as support and on lower time frames it is trading between the two moving averages. Some would say a dip below the 26 EMA opens up the door to bears but keeping an eye on the longer time frame, one remembers that the 111 EMA, 128 EMA, and the 20 weekly MA (black) have served as reliable bounce points when BTC turned bearish.
Bitcoin closed the week above the 20-WMA and has put a little space between each other but the weekly moving average convergence/divergence (MACD) in now in its second week of a bear cross with a negative histogram.
BTC-USD Weekly MACD. Source: TradingView
Longs vs. shorts
BTC-USD BitMEX Longs vs Shorts Daily Chart. Source: TradingView
As shown on the BTC/USD Longs daily chart, bulls have tested the resistance line 27,900 on multiple occasions and as BTC gathers momentum, it looks as if this point could be conquered at some time later on.
BTC/USD Shorts on the other hand, have ample room to keep moving upward and we can see that it is Longs that are piling into leveraged positions at a higher rate than shorts.
Sentiment wise, Bitcoin remains bullish and the macro market structure still has the potential to lean toward bulls.
As the Bollinger Bands tighten on the daily timeframe and BTC’s price range narrows to correspond with the narrowing descending wedge, Bitcoin could drop below the 20MA at $10,167. This could lead to a pullback to $9,469-$9,350, which would be a full retrace of last week’s action.
The Volume Profile Visible Range (VPVR) shows relatively stout purchasing demand around $9,500 and this begins to fizzle out near $9,300, which is below the base of the wedge pattern and the bottom Bollinger Band arm.
As a matter of last resort, $9,200-$9,100 would be the last support before an uptick in buying demand presents itself near $8,500. A drop to $9,300-$9,100 would be the third test of this support. Admittedly, no one knows if it will hold or give way next time around.
As mentioned previously, if Bitcoin price could set a higher high near $11,450 it would not only be encouraging, but would also bring the digital asset above the descending trendline of the wedge pattern.
Furthermore, there appears to be a massive inverse head and shoulders (IH&S) pattern in play that originates from Aug. 12.
BTC USD Daily Chart. Source: TradingView
The IH&S has a neckline at $10,920 and this point conveniently aligns with the descending trendline of the wedge at roughly Sept. 18. As suggested previously, Sept. 15-Sept. 23 is bound to provide some excitement and Bitcoin volatile is likely to spike around during this time.
Alternatively, a bounce from $10,000 is not out of the question and Bitcoin has crossed the $10K mark at least 19 times in the past few months.
A drop to the 20-MA ($10,167), $10,000 or even $9,450 could stir up enough demand to bring Bitcoin right back to $10,800 as this would simply follow the current pattern of consolidation within the wedge.
Though, it must be said that once breached, the 20 MA of the Bollinger Band indicator frequently flips from support to resistance. Bitcoin’s current struggle to cross above $10,500 on the 4-hour chart is indicative of this.
If Bitcon drops below $10,167, then this point is likely to become resistance and the lengthy pattern of lower lows within the wedge pattern also support the possible trend.
Ultimately, it’s anyone’s guess where Bitcoin goes from here. Obviously time will tell and the fact that BTC is tightening, along with the Bollinger bands within the narrowing wedge means BTC is fast approaching a decision point.
Over the weekend veteran trader Peter Brandt tweeted the following chart and said:
“Bitcoin meets the definition of a descending triangle. Don’t let newbie chartists tell you different. Right-angled triangles imply (but do not demand) a resolution thru the horizontal boundary.”
Traders are advised to keep a close eye on volume as it continues to drop off but we all know volume precedes price.
As BTC tightens and volatility becomes more restrained, keeping a close eye on the order books across the largest exchanges and Bitcoin’s volume could be provide valuable insight into which way the asset will break.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Top-5 Crypto Performers: XMR, EOS, BCH, BTC, DASH
The United States Federal Reserve is not working on a digital currency of its own, said Fed Chair Jerome Powell. He said that cyber security issues are likely to deter central banks from releasing their own digital currency. However, reports suggest that China might launch its digital currency as early as Nov. 11. If the Chinese digital currency becomes a success, it will force other central banks to launch their own to keep up with the competition.
There are several important events lined up in the next few months that are likely to be positive for cryptocurrencies. The first such event is the launch of Bakkt futures later this month. We expect volatility to pick up just before the launch and remain high for the first few days as both bulls and bears attempt to establish their supremacy. Let’s study the charts to locate the critical levels, which will confirm the resumption of the uptrend.
Monero (XMR) was the best performer among major cryptocurrencies by a wide margin. It has rallied close to 15% in the past seven days. Does this rise indicate the start of a new uptrend or is this just another pullback that will be sold into? Let’s analyze its chart.
The XMR/USD pair has formed a descending wedge pattern. If the price breaks out of the wedge, it can move up to $97.9733 and above it to $120. Therefore, aggressive traders can buy on a close (UTC time) above the wedge and keep a stop loss of $65.
Contrary to our assumption, if the price fails to sustain above the wedge, bears will again try to break down below it. Such a move will be a huge negative and can result in a fall to $40. Though there is minor support at $60, we expect it to be broken.
In the short term, both moving averages are flat and the RSI is just below the midpoint, which points to consolidation.
EOS is the second-best performer and has risen over 10% in the past seven days. Is this a dead cat bounce or the start of a sustainable rally? Let’s analyze its chart.
The EOS/USD pair is currently correcting in a descending channel. The 20-week EMA is sloping down gradually and the RSI is in the negative zone, which suggests that bears have the upper hand.
However, bulls are defending the support at $3.1534. Though this level has been tested thrice since early March of this year, the bears have not been able to break below it. If bulls can propel the pair above the descending channel, it will be a positive sign. The next level to watch on the upside is $4.8719. Both moving averages are located just below this resistance. Hence, a breakout of $4.8719 will indicate the start of a new uptrend and can be purchased with stops below recent lows. The target objective will be a move back to $9 in the medium term.
The second-largest fantasy sports service Fanduel has added support for cryptocurrencies, including Bitcoin Cash (BCH) for members to top up their accounts. One of the world’s biggest Bitcoin Cash conferences was held in Townsville, Australia. The town has several outlets that support digital currency payments, which shows increased crypto adoption. On the fundamental front, a lead developer of Bitcoin Cash said that the network was unable to process large blocks of transactions having a size of two megabytes or larger.
The BCH/USD pair is attempting to bounce off the neckline of the head-and-shoulders (H&S) pattern. This shows that bulls are defending this support level. However, unless they propel the price above the right shoulder at $360, we anticipate bears to again attempt a break below the neckline. If the pair plummets below the neckline, it will complete the bearish H&S pattern, which can drag the price to $105.
On the other hand, if bulls push the price above $360, it is likely to pick up momentum and rise to $515.35. A breakout of this level will invalidate the bearish pattern, which is a bullish sign. Traders can initiate long positions on a breakout and close (UTC time) above $360 with stops below the neckline.
The dominance of Bitcoin (BTC) has remained close to the 70% mark in the past week. This steady rise in Bitcoin’s dominance has left most altcoins struggling. Cantering Clark, a hedge fund manager and co-founder of Blockroots, believes that altcoin rally will start after Bitcoin breaks out to new highs or if its dominance drops below 40%. However, with the launch of Bakkt nearing, the spotlight is likely to remain on Bitcoin for the next few weeks. A recent event that caught the eye was a mystery transaction of 94,504 BTC. This made the recipient’s wallet the richest Bitcoin address that does not belong to an exchange. Will Bitcoin volatility increase in the next few days? What are the critical levels to watch on the upside and downside? Let’s look at the chart.
We like the sharp bounce in the BTC/USD pair from the trendline of the symmetrical triangle. This shows accumulation by bulls when the pair dips to the strong support of $9,080. The cryptocurrency can now rise to the downtrend line of the symmetrical triangle. A breakout of the triangle will be a positive sign that has a target objective of $15,376.96. Therefore, traders can buy on a close (UTC time) above the downtrend line and keep a stop loss of $9,000. The up-sloping moving averages and RSI above 50 show that bulls hold the advantage.
Our bullish view will be invalidated if the price reverses direction from current levels or the downtrend line of the triangle and plummets below $9,080. Such a move will dampen sentiment and can result in a fall to the $7,451.63–$7,337.78 support zone. A breakdown of this zone will reduce the probability of a new high in 2019.
Dash (DASH) has partnered with IQ CashNow, which specializes in cryptocurrency ATMs. This move will add over 1,000 additional merchants who accept Dash and integrate over 250 additional ATMs. The Dash Investment Foundation plans to start investing on behalf of the Dash network. While the fundamentals look good, what does the chart project? Let’s take a look.
In the last week of August, the DASH/USD pair dipped below the 78.6% Fibonacci retracement level of the rally, which is a bearish sign. Usually, this is followed by a complete 100% retracement, which in this case will be a fall to $58.49. A breakdown to new yearly lows will be a huge negative.
Currently, bulls are attempting a pullback, which will face resistance at the previous support turned resistance of $95.4264. Above this level, the next resistance will be at the downsloping moving averages. Due to weakness in the cryptocurrency, we suggest traders remain on the sidelines. We will wait for a new buy setup to form before proposing a trade in it.