Bitcoin - Shattering of the Bitcoin bubble
Updated
Yesterday, we projected a downward sloping channel and laid out conditions for its invalidation that came later with the breakout above the upper bound. In such a scenario, we stated the pattern would most likely get distorted. However, an increase in volume after the weekend makes us speculate about the price returning to the channel. Although, such development has to happen either today or tomorrow; otherwise, distortion of the pattern will materialize.
Despite that, we stick to our bearish narrative, mainly due to the persistence of bearish fundamental and technical factors. Among fundamental factors, we view threat predominantly in the prospect of higher interest rates, quantitative tightening, and a slowing economy. Indeed, mounting evidence continues to show the U.S. economy is headed into a deeper recession toward the end of 2022. As such periods are typically accompanied by risk-off mood among market participants, we expect this time to be no different.
Regarding technical factors, indicators show bearish signs across daily, weekly, and monthly time frames. That, in reality, reflects a powerful downtrend of a higher degree with the potential to last through the rest of 2022 and very likely also throughout 2023. Because of that, we have no reason to change our medium and long-term outlook on Bitcoin.
Indeed, we think the cryptocurrency market will stand a test over the coming months, with Bitcoin retesting its 2022 lows. Accordingly, we stick to our price targets at 17 500 USD and 15 000 USD.
Illustration 1.01
Illustration 1.01 shows the downward sloping channel we introduced yesterday. However, the breakout above the upper bound invalidated the channel. Because of that, we pay close attention to volume, which is on a pick-up after the weekend. In our opinion, that is a bearish sign, foreshadowing the price's return into the channel.
Technical analysis - daily time frame
RSI strives to turn bullish. MACD, Stochastic, DM+, and DM- are all bearish. Overall, the daily time frame is bearish.
Illustration 1.02
Illustration 1.02 portrays several bearish developments on the daily chart of BTCUSD. Yellow arrows indicate bearish breakouts below support levels and bearish crossover between 20-day SMA and 50-day SMA. All these developments support our bearish narrative.
Technical analysis - weekly time frame
RSI, MACD, Stochastic, DM+, and DM- are all bearish. Overall, the weekly time frame is bearish.
Illustration 1.03
The weekly chart of BTCUSD also shows two moving averages: 20-week and 50-week SMA. The price naturally retraced to its 20-week SMA, serving as a strong correction of the downtrend.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
Despite that, we stick to our bearish narrative, mainly due to the persistence of bearish fundamental and technical factors. Among fundamental factors, we view threat predominantly in the prospect of higher interest rates, quantitative tightening, and a slowing economy. Indeed, mounting evidence continues to show the U.S. economy is headed into a deeper recession toward the end of 2022. As such periods are typically accompanied by risk-off mood among market participants, we expect this time to be no different.
Regarding technical factors, indicators show bearish signs across daily, weekly, and monthly time frames. That, in reality, reflects a powerful downtrend of a higher degree with the potential to last through the rest of 2022 and very likely also throughout 2023. Because of that, we have no reason to change our medium and long-term outlook on Bitcoin.
Indeed, we think the cryptocurrency market will stand a test over the coming months, with Bitcoin retesting its 2022 lows. Accordingly, we stick to our price targets at 17 500 USD and 15 000 USD.
Illustration 1.01
Illustration 1.01 shows the downward sloping channel we introduced yesterday. However, the breakout above the upper bound invalidated the channel. Because of that, we pay close attention to volume, which is on a pick-up after the weekend. In our opinion, that is a bearish sign, foreshadowing the price's return into the channel.
Technical analysis - daily time frame
RSI strives to turn bullish. MACD, Stochastic, DM+, and DM- are all bearish. Overall, the daily time frame is bearish.
Illustration 1.02
Illustration 1.02 portrays several bearish developments on the daily chart of BTCUSD. Yellow arrows indicate bearish breakouts below support levels and bearish crossover between 20-day SMA and 50-day SMA. All these developments support our bearish narrative.
Technical analysis - weekly time frame
RSI, MACD, Stochastic, DM+, and DM- are all bearish. Overall, the weekly time frame is bearish.
Illustration 1.03
The weekly chart of BTCUSD also shows two moving averages: 20-week and 50-week SMA. The price naturally retraced to its 20-week SMA, serving as a strong correction of the downtrend.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
Trade closed: target reached
Our price target of 17 500 USD was reached.
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