Hello everyone and thank you for viewing my Technical Analysis for Bitcoin. I'm going to give a brief description for those of us who are less savvy in the Technical Analysis department and continue on to give a more detailed description of my observations for those who are more familiar with the tools and indicators I've included in the chart.
After a noticeable increase in selling volume for the last month, Bitcoin has continued it's range bound trading into the 1st half of the work week after being caught again at the psychological support level of $6,000 with only a brief fall below it. Bulls have failed on several occasions to rally through the key resistance level of $6,800 with trading Volume tapering off as time goes on. Due to trend conditions, the continued fall in volume at the time of this writing, sub par indicator readings, the potential formation of a three drives pattern nearing completion, and the TTM squeeze indicator signaling a large volatility swing soon to come my tentative targets for BTC over the next 2 weeks are between $5,500 (best case) and $4,500 at the time of this writing. In the event we manage to break up and close a daily candle above $6,800 with large buy orders in these low volume conditions, Bulls would likely be energized to apply more confident buying pressure at which time a reassessment would be warranted.
UPDATE: due to changing market conditions outlined here:
I'll be reassessing my Analysis of BTC once things settle down a little.
In more detail...
As seen in the RSI indicator (shadowed circles), each lower peak within the correction cycle has resulted in a higher high in the RSI which is widely known as "hidden bearish divergence". Additionally, We're following a rather clean depiction of a three drives pattern as seen in the chart with appropriate corresponding retrace measurements. The upward trend in the MACD broke lower and is presently displaying readings of stronger downward momentum.
I've chosen the 12 hour chart for a very specific purpose. The TTM squeeze indicator at the bottom of the chart. This indicator is a volatility / momentum indicator with the added feature of the center line showing red when the Bollinger bands are partially or entirely drawn into the keltner channels. Now, for those of you unaware of the significance of this indication, when the Bollinger draw in tight, the market is wound up like a spring and when released, this represents an increase in volatility specific to the time span it's observed within meaning the larger time span, the larger the move. For the duration of this correction, nearly every time this condition occurred in the 12 hour candle chart, a following price movement of $1,000 or more followed. We're presently signalling this condition as seen in the white circle of the indicator.
Combined with the RSI readings of Hidden bearish divergence, the present testing of the RSI 50, wave count, the overall corrective trend, and the increase in sell off volume paused with a brief move up while failing to break resistance and now sustaining a reduction of all volume, I find it highly likely this is a coil up to a significant channeling in downward momentum and potential heavy selling pressure.
Now I need to be entirely clear with volume this low, only a small number of large BTC purchases could result in this tentative conclusion being invalidated. However for the time being, I'm positioned in a low risk short with a stop loss at $6,850 and expect to remain in it until sub $5,500 levels. Additionally, the USD took a beating this morning which often times results in hedged moves into BTC, especially in the event weakening of the greenback gains momentum. Further yet, weakening of other currencies against the USD could also theoretically result in moves into Bitcoin with little other option on the table outside of an already strong USD.
It certainly will be interesting to see how the ever changing Geopolitical evironment will effect the Crypto market space moving forward. Until then, thing's don't look particularly great for BTC short term.
Stay tuned for more Technical Analysis from the staff at ICNN