Since my last price-related article Will Bitcoin Price reclaim the psychological USD 7k level? dated 26th February 2020, we have seen some interesting bitcoin price movements on Bitcoin. The Bearish Target 1, I mentioned has been hit and overshot to a low of USD 6031.50. Although there has been a bounce, bitcoin price is starting to look like any price movement North of here is merely a result of short positions closing, rather than accumulation by the Bulls.
As we head towards the monthly close, what are the critical Bitcoin price levels we need to watch?
A technical analysis using the following 3 measures is discussed:
Bitcoin Price: USD 6140
Open Interest: USD 577 million
Patterns: Bearish Ascending Channel on 12 Hour Chart, signs of re-distribution with a target: USD 4900. Bear Flag with a target: USD 3000
Major Resistance: USD 7285
Major Support: USD 5900
Moving Averages: 2 Day Death cross on EMAs, Potential close below monthly 21EMA looming
Momentum Oscillators: BEARISH
Short Term: NEUTRAL
Medium-Term Outlook): BEARISH
Long Term: BEARISH
Tried and tested, the monthly 21EMA (Exponential Moving Average), has proven to be a reliable indicator on a macro scale when looking at any market – judging whether it is generally “Bullish”, or “Bearish”. A monthly bitcoin price close above this average tends to lead to Bullish momentum, while a bitcoin price close below tends to lead to Bearish. Many of the market movers and their algorithmic Trading Bots are programmed to take positions based on bitcoin price relative to the monthly 21EMA.
Currently, the Bitcoin monthly 21EMA is sitting at USD 7285, with price sitting at USD 6140. Granted, although there would be some work to do over the last days of the month to achieve the 21EMA, this is not impossible. We have all seen Bitcoin move 20% – 40% in a day or two, but based on the anemic price action we are currently witnessing in lower time-frames, coupled with some additional observations, I will elaborate on below, I would say this is unlikely.
Still focusing on the higher to macro time-frames, if we look at both Weekly and Monthly Stochastic, both are crossed down, angled South and arguably looking to gain momentum.
Looking back in Bitcoin’s price history, there is strong confluence with downward price action and this exact situation.
If we combine this with RSI (Relative Strength Indicator), the Monthly is angled sharply down and will likely be testing the edge of the Bearish zone, a journey beyond the edge and into the Bearish zone would be a first for Bitcoin, adding more ammunition to the Bearish case.
The weekly RSI is still firmly in the Bearish zone and appears to have floated up to test the Point of Breakdown – this could play out later today as a rejection at weekly close, which too would not bode well for the Bulls.
We have seen many great price moves from Golden Crosses and Death Crosses in the Cryptosphere, resulting in some jaw-dropping markups and markdowns. The 2-day Death Cross has just been confirmed – one which has a nasty habit of playing out with double-digit declines being the “norm”. One thing also to note is that it doesn’t necessarily have to play out within a specific time limit. It could in some circumstances, play out immediately, and in others, perhaps take a few weeks.
Price could try test higher, maybe even test some major EMAs, which if rejected, indicating that market movers are going to play out the Death Cross to the Sell-side.
It’s not all doom and gloom, Bitcoin has a legitimate chance of turning things around and regaining Bullish momentum. Retaining closes above the weekly 200EMA and 200SMA would be a great start, and we will get to see that play out in a few hours from now (today being Sunday). More importantly, as mentioned above, a close above the magical monthly 21EMA in 2-days’ time would certainly bode well.
Another scenario could be to have an initial down (dump) to create a “Lower Low”. On the daily timeframe, we may then start to see divergences build between RSI and price, ultimately setting us up for a more sustained bounce or even a reversal.
On a really Long or Macro time-frame, I remain Bullish on Bitcoin and see all these price movements as noise in the bigger picture. The price today, tomorrow or 2 months from now, is really no indication of where the Bitcoin price will be in 3-5 years.
By Wes Carlson – Chief Operating Officer of CryptoFish – 29 March 2020
Disclaimer: This is not investment advice. It is produced merely for discussion and educational purposes. Please do your own research. I am using BitMEX Exchange for charts and Price Data, please adjust accordingly for your exchange of choices.
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