WEEKLY ANALYSIS (OCT 13 — OCT 19)
Cryptocurrency markets continue to be depressed again for this week. The bears interjected before the buyers could form tight support levels and the prices dropped below $8000 again. The up and down traders were evident but the market capitalization dropped to $217 billion. Bitcoin dipped below $8,000 on Friday. The shallow recovery that ensued remained largely lethargic as the price tried and failed to break above $8,000. The drop came after a failed attempt to correct above $8,100. After struggling to break above $8,000 for the past several days, Bitcoin was once again able to find some support near the $7900 region that held strong and allowed BTC to move back up above $8,000. $7800 was the final support formation as the prices went unexpectedly down to $7825. From the momentum tab in the charts below, the prices gained momentum in the first day of the week but suddenly went down. The momentum is a lagging indicator showing the market not being able to settle with a long-term sentiment this week.In this war of ups and downs and tensed market conditions, bears mostly win.
The downtrend explored the levels towards the support at $7,800. A following shallow trend has seen the price retest $8,000 but BTC/USD has readjusted to $7,940 (current market value). A bearish flag pattern was forming near the $7800 but the bulls came for the rescue and pushed the BTC up. This slight surge further confirms the long-established notion that the upper-$7,000 region is a strong region of support, as BTC as consistently found notable buying pressure in this region. It is important to note that the lack of follow-through from buyers who have been holding the support level at $7,800 may point to an underlying weakness for the cryptocurrency.
Bitcoin could be caught in an ascending triangle on a higher time frame, which could prove to be a bullish sign for its mid-term price action.
Bitcoin bounced up from the 200-day moving average last week and witnessed a double bottom breakout on the 4-hour chart. Even so, the cryptocurrency failed to take out the 200-day MA on Oct.11 and has dropped to levels below $8,000, forming a bearish lower high pattern above $8,800. This slight surge further confirms the long-established notion that the upper-$7,000 region is a strong region of support, as BTC as consistently found notable buying pressure in this region. The 50-day MA is falling fast and may drop below the 200-day MA over the next week or so and this is where the death cross appears in the charts. If confirmed, the chart event would be the first such crossover of these averages since March of last year. What exactly is ‘death cross’ is defined below:
Figure — death cross on S&P 500 charts
According to Investopedia “The death cross is a technical chart pattern indicating the potential for a major selloff. The death cross appears on a chart when a stock’s short-term moving average crosses below its long-term moving average. Typically, the most common moving averages used in this pattern are the 50-day and 200-day moving averages.” A market is often oversold by the time a cross is confirmed, as the MAs are based on past data and the crossovers are a product of price rallies or sell-offs.
Note that the relative strength index (RSI) was reporting oversold conditions when the crossover happened. For now, Bitcoin is exchanging hands at $7,930. The Moving Average Convergence Divergence (MACD) suggests that bullish pressure is still present. However, Bitcoin will require a catalyst to assault the congestion of sellers at $8,000 as well as the supply zone at $8,100. The bulls need to enter gain the powers. Otherwise, the red boxes forming in the figure below might continue for the next week.
Additionally, the cryptocurrency is set to undergo a mining reward halving in May 2020 and may repeat history by picking up a strong bid six months ahead of the event
On Oct. 18, the total number of mined bitcoins crossed 18 million, leaving 3 million to mine in total. Following the new milestone, Bitcoin now has 85.7% of total coins mined, while the number of Bitcoin left to mine until the next halving now amounts to 373,888. Read our full article on the consequences of halving and what happens after all the BTCs are mined here.
Oct 20, 2019