Last week Bitcoin was again wavering around 10,000 until August 2018 when it plunged to $9600. The drop occurred hours before the weekly close of the BitMEX perpetual contract, which reflects the price of bitcoin on major spot exchanges. Most analysts have attributed the drop to the close of the CME bitcoin futures contract, which previously has marked several pullbacks for the dominant cryptocurrency. This bearish break dropped Bitcoin below the $10,000 and $9,800 support in BTC against the US Dollar. The price even settled below the $9,760 support and the 100 hourly simple moving average. Last week we have mentioned the 4-hour symmetrical triangle formation developing and that we were expecting the breakout (either direction) to take place very soon. The drop was expected since a drop is usually followed by the formation of a symmetrical triangle. Despite that triangles usually ‘pop’ to either side shortly before reaching the actual apex and tend not to wait till the exact apex.
Bitcoin price extended its decline and traded towards the $9,300 level against the US Dollar.
The price is still undergoing corrections, but it is likely to struggle near $9,600 and $9,700. After the plunge, it is traveling between $9500 and $9700. Finally, there was a break below the $9,500 support and the price extended its decline towards the $9,300 level. A swing low was formed near $9,308 and the price is currently correcting higher. There is a short term breakout pattern forming with resistance near $9,500 on the hourly chart of the BTC/USD pair. Breaking these breakout levels may carry the prices strongly toward either direction. The price is likely to resume its decline after a short term correction towards $9,760 or $9,800.
The next key resistance is near the $9,760 level (the previous support). However, the main resistance is near the $9,800 level. Coinciding with the 50% Fib retracement level of the recent decline from the $10,300 high to $9,300 low, this reaction can be potentially traced by Bitcoin in the next month. To move back in a positive zone, the price must break the $10,000 resistance and the 100 hourly simple moving average. On the downside, an initial support is near the $9,400 level. If there is a downside break below the $9,400 and $9,300 levels, the price could extend its decline. The next target for the bears could be near the $9,000 level. An intermediate support is near the $9,200 level. From the bullish side, if indeed a correction coming up it will likely send Bitcoin to the support turned resistance levels at $9800 and $10,000 (along with the triangle’s boundary that broke down and the significant 100-days moving average line — marked white). Further above are $10,300 and the 50-days moving average line (around $10,500), which Bitcoin had failed to break-up early this week.
Sentiment Analysts have given an utmost verdict to the prices of bitcoin. The psychological $9000 mark is at present being defended by buyers. Failure to hold could see the price quickly returning down to the next major area of support $7500. Sentiments are vigorous drivers of the prices, thus the analysis is a plausible outcome from their ends. Coming back to the technical indicators, levels are in support of the current uptrend. The Relative Strength Index (RSI) is almost brushing shoulders with 70 (overbought zone). After failing to succeed in creating a higher low on the daily chart, the RSI plunged severely to the 38 level. This is its lowest value since February 7, 2019 (almost seven months). The positive insight is that the Stochastic RSI is deep down in the oversold area, so a temp correction might be coming soon, along with reaching to a possible support area ($9400 — $9500). Also, the Moving Average Convergence Divergence is moving closer to the mean line in the quest to re-enter the positive zone. The visible divergence means that the buyers have the energy to push BTC higher. Both the Stochastic and MACD indicators have just turned bearish but are still pretty tight. The MACD moving averages have converged right a the mid-line so a tilt in price, either way, will sway the indicator.
Another simple indicator we can look to is BTC’s rapidly shrinking trade volume. When the price peaked in late June, Bitcoin’s trade volume topped out at $45 billion, according to CoinMarketCap. The 4-hour BTC/USD chart above looks like it’s in a big consolidation phase as bulls and bears make up their minds. The market appears to recover its $10,000 value but the parameters are still tight. The growth looks delayed and the market is not able to gain back its trading volume. The tightening range also becomes less and less profitable, so traders stop trading in this scenario. Traders, in this case, will either exit all positions, or simple set stops and let the trend choose the eventual direction. On the contrary, Bitcoin has shown strong fundamentals. This week, Bitcoin network hash rate set a new record, while its share of the overall cryptocurrency market cap rose above 70% for the first time since mid-March 2017. Regarding other cryptocurrencies, altcoin markets meanwhile faced a day of a modest recovery in the last 2 days after falling lower than Bitcoin. Ether (ETH rose 0.8% to cling to $170, while XRP and EOS (EOS) gained around 2%. Litecoin is producing activity but is still struggling close to $65. Bitcoin SV (BSV) was the surprise champion in the top twenty, delivering 5.2% daily gains but it is not a trustworthy cryptocurrency in the Bitcoin community.