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Bitcoin Price Analysis: Bitcoin Bulls Find Respite Along Major Support Lines

Over the last week, bitcoin has seen an aggressive markdown from the $12,000s to the $6,000s — a 50% move in 7 days. Right now, a battle between the bulls and the bears is under way as the market is trying to decide if today’s rally is a temporary bottom or a decisive end to the aggressive bitcoin bear market:

Figure_1.jpgFigure 1: BTC-USD, 1-Day Candles, Macro Trend

To date, the market has broken number lines of support including the daily 200 EMA. The daily 200 EMA has been a strong support for the last few years and has been a pivotal marker when determining the health of the trend. At the time of this article, BTC-USD is testing the macro 61% Fibonacci retracement values shown above. Last night we blew right through that line of support, and today we are attempting to test it from the bottom to see how strong the support has been turned into resistance.

Figure_2.jpgFigure 2: BTC-USD, 4-Hour Candles, Current Trend

The image above shows a massive swell of volume leading into an aggressive fall and a sharp bounce. Whether this bottom is an absolute bottom of the bear trend remains to be seen, but it is unlikely we will be making any new lows anytime soon. We are testing very strong support right now and the effort it would take to break this zone of support is high.

On a much higher time frame, bitcoin has managed to find support:

Figure_3.jpgFigure 3: BTC-USD, Weekly Candles, Macro Support

The weekly 50 EMA has managed to provide very solid support at the moment and is likely to prove difficult to break through in a solid pass. For now, we have strong evidence that a local bottom is in.

Summary:

  1. An aggressive drop of 50% in one week leads bitcoin to see a sharp rally from the $6,000s.
  2. There is strong macro support here and there is a very solid argument that a local bottom has been found.
  3. Whether this marks the end of the bear market remains to be seen, but for now it seems unlikely that we will see lower lows in the immediate future.

Trading and investing in digital assets like bitcoin and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on eBits.Co and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.


Aerospace engineer turned crypto-market analyst. Bitcoin Schmitcoin became popular within the subculture of the Reddit communities and now posts his daily thoughts and market outlook via Twitter and his regular stream on Twitch.tv.

Bitcoin Schmitcoin on Twitch.tv

Bitcoin Schmitcoin: YouTube

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Bitcoin Price Analysis: Bearish Continuation Pattern Could Signal End of Bullish Rally

Over the last couple weeks, bitcoin has seen a dramatic drop in price dropping from $20,000 to $6,000. Shortly after bottoming at $6,000, hopeful investors jumped at the chance to catch a discounted coin. Is this rise sustainable and does it mark the end of the drastic correction?

Let’s take a look at the macro trend:

fig1Figure 1: BTC-USD, 1-Day Candles, Macro Trend

One of the most concerning things regarding the health of this trend is the breakdown of both the parabolic and linear trends. Both trends lasted several years and represented the entire life of a multi-year bull market. A breakdown of these trends marks the beginning of a new market and a new trend. Whether this is going to be a sustained bear market or we have bottomed out and are beginning a bull market remains to be seen, but a few things are sticking out that point toward the possibility that this correction might not be finished just yet.

fig2Figure 2: BTC-USD, 1-Day Candles

First, we are currently finding resistance on the 1-Day 200 EMA (the red curve). If we look up at Figure 1, we notice that this is the first time since 2015 (the end of the last bear market) that BTC-USD has been below the 200 EMA. Throughout the life of this bull market, bitcoin has reliably found support on the 200 EMA. However, at the time of this article, the price is trending below the 200 EMA and is currently in the process of testing the strength of its resistance level.

Second, we can see a notable drop in overall volume since the price bottomed out at $6,000. Every single daily candle since we bottomed out has seen less and less volume, indicating a lack of interest from larger buyers at these prices. This price pattern could yield a bearish continuation in the form of a bear flag. Bear flags are brief intermittences in bearish trends where the price temporarily rallies due to bullish speculation, but fails to continue upward. The texbook sign of a bearish continuation is a brief rally coupled with diminishing volume.

fig3Figure 3: BTC-USD, Daily Candles, Potential Bear Flag

The measured move of this bear flag would have us targeting somewhere between $3,000 to $4,000. I don’t consider this price target out of the question as the all previous bear markets have yielded a 78% retracement in price. Currently, our 78% retracement sits around $4400.

Summary:

  1. Bitcoin has seen a local bottom around $6,000.
  2. A weakening rally has left bitcoin testing strong resistance on diminishing volume.
  3. A potential bearish continuation could send bitcoin down to the low $4,000s, after everything is said and done.

Trading and investing in digital assets like bitcoin and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on eBits.Co and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.



Aerospace engineer turned crypto-market analyst. Bitcoin Schmitcoin became popular within the subculture of the Reddit communities and now posts his daily thoughts and market outlook via Twitter and his regular stream on Twitch.tv.

Bitcoin Schmitcoin on Twitch.tv

Bitcoin Schmitcoin: YouTube

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Bitcoin Price Analysis: Possible Bear Pennant Suggests End to Market Consolidation

Looking back at bitcoin’s parabolic curve, we can see notable lines of support and resistance throughout its market cycle. Two highly reliable sources of support and resistance are the set of 50/200 EMAs and the Fibonacci Retracement set from the beginning of the bull market to the top of our current all-time high:

fig1Figure 1: BTC-USD, 1-Day Candles, Macro Trend

Over the last couple days, bitcoin has attempted to break the overhead resistance surrounding the 38% retracement values and the 50 EMA on the daily candles. Unfortunately, it hasn’t gathered enough bullish momentum to carry us through the resistance level.

If we begin to look at lower time frames, we can see the signs of bearish consolidation that could potentially lead to a significant markdown in price:

Figure_2.JPGFigure 2: BTC-USD, 4-Hour Candles, Macro Bear Pennant

The bear pennant (outlined by the pink dashed line) marks a strong, bearish continuation pattern that could have us testing values as low as the $4,000s. The textbook signs of the bear pennant include a bearish move leading into a symmetrical triangle. Confidence of this continuation pattern increases when we see volume consolidation throughout the length of the symmetrical triangle. Together, all these signs make the bear pennant continuation pattern very likely.

In the event of the bearish continuation, we can expect to find support in the follow zone that may slow the dramatic price target considerably until it meets its ultimate price target:
Figure_3.JPGFigure 3: BTC-USD, 1-Day Candles, Support Below Bearish Pennant

The 61% Fibonacci retracement values and the daily 200 EMA are very strong support areas that will not be punctured without some significant volume and selling pressure. This area of support also coincides with the macro linear trendline outlined in Figure 1 above. This confluence of support leads me to believe that the 61% Fibonacci levels will be a logical level of consolidation where the market will decide if it has bottomed out or will ultimately continue further down.

Summary:

  1. Bitcoin appears to be at the end of its multiweek consolidation period.
  2. The market is consolidating in a bearish consolidation pattern called a bear pennant.
  3. If the market reaches its full measured move for the bear pennant, we could see prices as low as $4,000 region.
  4. If we break to new lows, we will logically find support around the 61% Fibonacci retracement values.

Trading and investing in digital assets like bitcoin and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on eBits.Co and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.



Aerospace engineer turned crypto-market analyst. Bitcoin Schmitcoin became popular within the subculture of the Reddit communities and now posts his daily thoughts and market outlook via Twitter and his regular stream on Twitch.tv.

Bitcoin Schmitcoin on Twitch.tv

Bitcoin Schmitcoin: YouTube

Continue Reading

Investing

Bitcoin Price Analysis: Bearish Continuation Likely as BTC Tests Strong Support

Lower highs and lower lows have been the eBits for the last few weeks — market behavior that has left even the most bullish investors scratching their heads. Since bitcoin’s dramatic rise to $20,000, there has been a series of harsh drops temporarily stifled by feeble rallies. At the time of this article, BTC-USD has managed to break through three major levels of support of both the upper and lower parabolic trends, and a long-term linear trend:

fig1Figure 1: BTC-USD, 1-Day Candles, Macro View

For the time being, BTC-USD has managed to find support on the macro 50% retracement values twice. The 50% retracement has proven to be a strong level of support, but if you take a closer look at the market, there isn’t a whole lot of support below those values all the way down to the $7,000 values.

fig2Figure 2: BTC-USD, 6-HR Candles, Next Levels of Support

Looking at the way the 50 and 200 EMA are acting on the 6-hour chart, we see that the overall macro trend is moving downward and is actually finding resistance on the 200 EMA — values that for a long period of time have shown to be firm levels of support. On the 6-hour candles, the 50 and the 200 EMAs have formed a pattern called a “death cross.” A death cross is when the 50 EMA crosses downward and begins trending below the 200 EMA. This is typically a sign of a more macro, bearish market outlook.

If the 50% values fail to provide support on the next test, a sharp drop could be in store — a sharp drop similar to the one from $14.5K to $9K. Looking at the image above, it becomes apparent that the parabolic rise to $20K was so sharp and aggressive, there was little time to establish firm levels of support on the way up.

Well, now that we are moving back down in price, the aggressive growth comes with aggressive consequences. In our case, the aggressive consequence is the lack of support between the $10,000 and $7,000 values. If we do see a drop below the 50% Fibonacci line, it is highly likely to find support along the 61% values where the blue bar is shown above.

Another level of support is likely to be found on the daily 200 EMA, just above the blue region:
fig3Figure 3: BTC-USD, 1-Day Candles, Daily 200 EMA

The 200 EMA on the daily chart has proven time and time again to be a firm level of support in previous corrective periods. It is highly unlikely that this level of support would break without several tests of the 200 EMA. In general, there is a strong confluence of support between the low $7,000s and high $8,000s. Given the current trend of lower highs and lower lows, I think it’s very likely we will see a test of these support levels.

Summary:

  1. Bitcoin has managed to establish a trend of three lower highs and four lower lows to really cement the current bearish trend.
  2. Bitcoin managed to find resistance on the parabolic curve and is now in the process of testing the support of the 50% Fibonacci retracement values.
  3. If the current levels of support do not hold, support will be found between the $8,000s and $7,000s as there is a strong confluence of support in those price values.

Trading and investing in digital assets like bitcoin and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on eBits.Co and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.



Aerospace engineer turned crypto-market analyst. Bitcoin Schmitcoin became popular within the subculture of the Reddit communities and now posts his daily thoughts and market outlook via Twitter and his regular stream on Twitch.tv.

Bitcoin Schmitcoin on Twitch.tv

Bitcoin Schmitcoin: YouTube

Continue Reading
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