Analytics provided by BBA
As expected, the bitcoin markets have been relatively stable over the past week, although it now looks like a rally up to resistance is becoming more and more likely.
Now that a week has passed since the halving and there has been no technical incident, no significant drop in hash rate, no network clogging fee event, and no major selloff in price, we think the market is simply digesting its new economic reality for the time being. Unfortunately for traders this digestion period means a lack of volatility due to a tightening consolidation, however as we know range contraction inevitably leads to range expansion at some point. While this range expansion may not be imminent, the market seems to be preparing itself technically for this possibility.
Our working hypothesis for the past month has been that bitcoin is currently in a range-bound consolidation between the $550 and $780 levels, within which price has been pinned near the midpoint for over a week. Following what was an extremely stagnant trading day over the weekend on Saturday, Sunday saw a slight pick-up in buying action which pushed price above key resistance at 680 $. Now the market is trying to hold these gains into the new weekly candle as macroeconomic uncertainty is relatively high going into this Monday, so if the bulls can successfully fend off the bears for a bit longer then there is a good chance at testing $700 in the not too distant future.
Moving on to the charts for additional clarity and granularity, we first want to revisit the daily chart in order to get the medium term perspective. We can see that the bullish pennant formation has now been resolved to the upside, however we are lacking firm confirmation which means it very well could be a fakeout breakout. Momentum and volume are not very helpful either considering Willy, RSI, and MACD all continue to tread water near the centerline while volume profile remains porous. Having said that, there are some hints that buying pressure is building, mainly via the Willy moving average (MA), so despite a mixed technical picture the medium term still favors the bulls.
With the daily chart staying inconclusive, we want to nail down even further which is why we are presenting a 4-hour chart for the first time. The chart below shows a slightly more bullish picture than the daily, although there is still very heavy resistance at multiple levels just overhead. We can see that the market is trying to form an ascending triangle pattern which should resolve to the upside, however the $685 – $700 area has already rejected three rallies over the past four weeks. Additionally, the momentum oscillators are already getting close to overbought territory with Willy flashing some warning signs, but the 9/18 EMA Is turning bullish and we have now broken the 200-period SMA.
Volume and volume profile both look much healthier on this chart than the daily chart seeing as though we have a fairly even volume distribution around the point of control (PoC) and sellside volumes have finally waned. All in all, we think the bias is to the upside in the near term, although we are still not convinced that we are ready to eject from the larger $550 – $780 consolidation range. The indications are that a resolution is nearing, and that it looks like it will once again be higher, however patience remains a virtue until we get a confirmed breakout. A move above $700 would be a start, but even that will likely prove to be a struggle over the next week or so. Remember, “buy the dips, sell the rips” remain our mantra for the time being.
BullBear Analytics is the longest standing cryptocurrency forecasters in the market. They started in 2010, doing technical reports in bitcointalk.org, and have evolved into a buzzing community of traders. Adam is BBA’s chief analyst.
Disclaimer: Please always do your own due diligence, and consult your financial advisor. Author owns and trades bitcoins and other financial markets mentioned in this communication. We never provide actual trading recommendations.Trading remains at your own risk. Never invest unless you can afford to lose your entire investment. Please read our full terms of service and disclaimer at the BullBear Analytics Disclaimers & Policies page.
Follow us on Facebook