Bitcoin Technical Analysis, Monday 10th September 2018

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Bitcoin Technical Analysis, Monday 10th September 2018

Posted on September 10th, 2018 in Technical Analysis,Bitcoin News by Tom Whitbread

As Bitcoins price action tested support during the week, a death cross on 9 and 26 daily moving averages has formed on the daily BTC timeframe today.

With Bitcoin selling off amid rumours circulating at the end of last week due to an article in Business Insider surrounding Goldman Sachs' crypto trading desk, which reversed sharply later as it was labelled 'fake news' by Goldman CFO Mr Martin Chavez who also admitted to holding 5 BTC himself.

Technicals

A death cross has been next in order, and it's just drawn today on the daily chart, with stochastics also oversold, and price action nearing the bottom of the channel around $5750 we could see momentum take Bitcoin down to month lows in the coming sessions if volume does not pick up.

Reversal out of the bear trend would see resistance around the 6800 level again, gravitating towards the daily moving averages. 

If stochastics can extend out of oversold and breach the 55 key balance, we could see some run in a relief rally although currently, prices have been testing support, again and again, hitting lower lows for the past week, with some respite during the weekend.

Previous lows hit 5778 back in June and recently in August, at both lows we saw strong demand that built into upside rallies of 20~40%. 

Great Liquidity Crisis

Although the current turmoil in the stock markets, and with international trade deals have seen Bitcoin as a potential risk off hedge against traditional markets, with JPMorgan's lead quant Marko Kolanovic predicting a great liquidity crisis, stating this could be the largest flash crash causing social unrest unseen in 50 years.

Kolanovic predicts that stock markets will sell off sharply, with severe drops. Forcing central banks to take unprecedented moves, including essentially purchasing equities themselves to prop markets up. 

It's the 10th year since the financial crisis of 2008, and this huge 168 page report from JP details perspectives from 48 analysts and economists. US stocks have been in a record bull run, over three thousand days in total, with periods of calm plateaus and then rapid capitulation, commonly known as flash crashes, for example in February of this year, a drop of 1,600 points on the S&P index and then again in August of 2015 a sharp 1,100 point drop.

"If you have these liquidity-driven sharp sell-offs that come at the end of the cycle, or maybe even causes the end of the cycle, then I think you can have a much more significant asset price correction and even more significant increase in market volatility," Kolanovic said.

Kolanovic coins the term 'Great liquidity crisis' for a potential meltdown in stock prices, which could cause the next financial crisis. If stock markets fall by more than 40 percent, the federal reserve would be forced to prevent a spiralling downward situation. Which could move them to take unconventional action such as buying equities, a step Japan's central bank has already taken.

For Bitcoin and cryptos in general, the news of turmoil in the fiat-based conventionally controlled financial systems is purely reassuring; and proves that the decentralized nature of a peer to peer system is optimal, rather than that of a centrally controlled one. 

Primarily crypto has resilience and could provide the alternative route for a risk-off hedge that investors need in case of a rapid decline in fiat currency and stock markets.