BTC – Bottoming Signs
Well, it’s a week after my previous post on the directional prospects for Bitcoin and it was the bearish case that won out. I noted a 3 Black Crows pattern in the weekly candlesticks had formed and bearish momentum in the MACD, which overwhelmed the levels of support that were in play.
This week we can see the bearish momentum has continued with a large (16%) drop from 63.8k down to 53.4k at the bottom of the wick. And it is the nature of this wick that catches my attention. Here I’ll list a few of my observations:
(1) We can see that the lower wick is long, indicative of strong buying off the 53k low.
(2) A level of support has been confirmed at 52.9k.
(3) This buying pressure has resulted in a false break of the declining channel.
(4) Price found support back above the S1 level of the weekly pivot.
(5) The lower Bollinger Band was temporarily broken, a first for the history of Bitcoin.
So, while price has bounced back strongly from the weekly low, is there more momentum to the downside? Well, certainly the MACD is widening showing momentum in this time frame is downward and the RSI has broken a critical support level at 52.85.
Most notably, the break of this level in the weekly RSI, between the Halving and next all-time high, has only happened once before. That was in July 2013, following a multi-week correction, after which price took off on its path to greatness. In fact, this was coincident with a widening MACD
It would seem that, despite bearish momentum, price declines could be exhausted if history is a guide.
Looking at the daily chart and we see a very interesting occurrence of a Dragon Fly doji followed by a strong bullish candlestick. Indicative of a trend reversal confirmation. The lower BB has offered support and price is only $500 off reclaiming the support of the 1D 200MA and the 0.786 of the declining Fibonacci channel.
In Elliot Wave terms there is an apparent completion of a 3-3-5 Flat Correction (red ABC wave), that resolves at the 1x projection of A from B, and a rising RSI from over bought territory and along bottoming MACD.
If price can reclaim the 1D 200MA and the RSI break back above its declining trendline, then there could be cause for bullish optimism.
What do you think? Is pricing falling further to 50k (S2 & 1.236 Fib projection for C) or maybe even 48K (the 1.382 projection of the C-wave)? Or has price turned around and we’ll shoot back above 64K after reclaiming the 200MA?
This week we can see the bearish momentum has continued with a large (16%) drop from 63.8k down to 53.4k at the bottom of the wick. And it is the nature of this wick that catches my attention. Here I’ll list a few of my observations:
(1) We can see that the lower wick is long, indicative of strong buying off the 53k low.
(2) A level of support has been confirmed at 52.9k.
(3) This buying pressure has resulted in a false break of the declining channel.
(4) Price found support back above the S1 level of the weekly pivot.
(5) The lower Bollinger Band was temporarily broken, a first for the history of Bitcoin.
So, while price has bounced back strongly from the weekly low, is there more momentum to the downside? Well, certainly the MACD is widening showing momentum in this time frame is downward and the RSI has broken a critical support level at 52.85.
Most notably, the break of this level in the weekly RSI, between the Halving and next all-time high, has only happened once before. That was in July 2013, following a multi-week correction, after which price took off on its path to greatness. In fact, this was coincident with a widening MACD
It would seem that, despite bearish momentum, price declines could be exhausted if history is a guide.
Looking at the daily chart and we see a very interesting occurrence of a Dragon Fly doji followed by a strong bullish candlestick. Indicative of a trend reversal confirmation. The lower BB has offered support and price is only $500 off reclaiming the support of the 1D 200MA and the 0.786 of the declining Fibonacci channel.
In Elliot Wave terms there is an apparent completion of a 3-3-5 Flat Correction (red ABC wave), that resolves at the 1x projection of A from B, and a rising RSI from over bought territory and along bottoming MACD.
If price can reclaim the 1D 200MA and the RSI break back above its declining trendline, then there could be cause for bullish optimism.
What do you think? Is pricing falling further to 50k (S2 & 1.236 Fib projection for C) or maybe even 48K (the 1.382 projection of the C-wave)? Or has price turned around and we’ll shoot back above 64K after reclaiming the 200MA?
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