Bitcoin Prints A Failed Low And Tries to Form A Base
Updated
Happy (almost) New Year! Today, I'm writing a couple of updates on the crypto market. I'll do my best to keep this short, since I have other things I need to focus on right now. I'm also a bit sleep-deprived, so I apologize in advance if I don't make sense. Anyway, this first update is about Bitcoin.
To be honest, when I left for vacation I was feeling extremely bearish. I was preparing myself to find a massacre when I returned. However, we're still basically holding the same levels. I think BTC is trying to form a base here. We recently had a failed lower low on decent volume, and now we're back above the important $7300 level, tapping on $7400, which we have failed to break above a number of times. On the weekly chart, the Ultimate Oscillator tapped bottom again (circled in yellow), which happened at the beginning of this year before the run up towards 13.8K. The weekly indicators are primed for a move to the upside, if we can continue holding support here. We're also back above the 100w MA (green). We experienced a bullish cross just a couple of weeks ago, but it has failed so far to produce a powerful move to the upside, like it did in 2016. That failure resulted in a selloff that took us to our recent failed low, and to a retest of the bottom of the bearish channel.
Things still don't look objectively bullish but cryptocurrency buyers do have an opportunity here, as long as demand stays steady around current prices. We're seeing some decent buy volume near these lows, which is somewhat encouraging. For the bullish narrative to return, this is what I'd like to see:
1) We should close this weekly candle above the 100w MA (around $7200).
2) Bitcoin needs to break and hold the 50d MA and the 50w MA (in the $7500-7600 area).
3) Finally, a break out from the bearish channel. If we tested that resistance now, we'd need to break above $8500.
4) Break and hold above the 200d MA (near $9300).
I'm also still watching Litecoin. It's back above the $41-42 area, which is pretty important. I'd like to see LTC form a base here as well. If LTC and BTC cannot hold these levels, there is plenty of room for downside in the market. I'm just speculating that this could still be part of the bottoming process, and that we may not actually need to test lower levels.
That's it! This is not financial advice. This is just my opinion, and should be used for speculative purposes only.
-Victor Cobra
To be honest, when I left for vacation I was feeling extremely bearish. I was preparing myself to find a massacre when I returned. However, we're still basically holding the same levels. I think BTC is trying to form a base here. We recently had a failed lower low on decent volume, and now we're back above the important $7300 level, tapping on $7400, which we have failed to break above a number of times. On the weekly chart, the Ultimate Oscillator tapped bottom again (circled in yellow), which happened at the beginning of this year before the run up towards 13.8K. The weekly indicators are primed for a move to the upside, if we can continue holding support here. We're also back above the 100w MA (green). We experienced a bullish cross just a couple of weeks ago, but it has failed so far to produce a powerful move to the upside, like it did in 2016. That failure resulted in a selloff that took us to our recent failed low, and to a retest of the bottom of the bearish channel.
Things still don't look objectively bullish but cryptocurrency buyers do have an opportunity here, as long as demand stays steady around current prices. We're seeing some decent buy volume near these lows, which is somewhat encouraging. For the bullish narrative to return, this is what I'd like to see:
1) We should close this weekly candle above the 100w MA (around $7200).
2) Bitcoin needs to break and hold the 50d MA and the 50w MA (in the $7500-7600 area).
3) Finally, a break out from the bearish channel. If we tested that resistance now, we'd need to break above $8500.
4) Break and hold above the 200d MA (near $9300).
I'm also still watching Litecoin. It's back above the $41-42 area, which is pretty important. I'd like to see LTC form a base here as well. If LTC and BTC cannot hold these levels, there is plenty of room for downside in the market. I'm just speculating that this could still be part of the bottoming process, and that we may not actually need to test lower levels.
That's it! This is not financial advice. This is just my opinion, and should be used for speculative purposes only.
-Victor Cobra
Note
Another thing to note is that Bitcoin has broken out of the downtrends I was watching earlier this month. These were the support and resistance of the falling wedge that broke to the downside: Note
Bitcoin really needs to rise above the 50d MA (red) for any continued upside from current levels. Below are two examples from 2018 where we found resistance at the 50d MA. One shows a breakout from an inverse head and shoulders bottom, and the other shows a failure and a breakdown, leading to a 50% drop in price. If we broke down at current levels, I don't know if it would be that extreme. I'd look at the $6100 level, and perhaps $5950 to provide support if that happened. On the upside, there appears to be more liquidity. If we head above the 50d MA, we could actually head straight up towards the 200d MA, above 9K. We still need to break that downtrend channel resistance though.Bullish breakout:
Bearish breakdown:
Note
So Bitcoin has broken out of the channel, but until we get above 10.5Kish, I'd be worried about something like the failed July 2018 rally happening (yellow scenario in the below chart). I'd much rather see something like the pink occur, but one should prepare for either scenario. Note
Looking at the weekly, the oscillators seem to favor something like the pink, since there is a clear difference in the frame of reference for both the UO and Stoch RSI. 
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