Bitcoin Price Analysis: Bulls’ Summer Vacation or Bear Trap? (Week of July 20th)

Bitcoin Price Analysis from CoinTelegraph.

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Bitcoin Price Analysis: Bulls’ Summer Vacation or Bear Trap? (Week of July 20th)

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BTC price at press time: US$276

Last week’s price alert began with:

“The RSI became overbought and it now correcting that condition. The price is testing support levels now and needs to hold.  Nevertheless, RSI is on a buy signal. Right now, 50-55 looks like the support area in RSI. The Money Flow Index is also on a buy signal and in bullish territory. OBV has begun picking up slightly but is not convincing; it is not at the pace one would expect with the rise in price. It would be good to see volume confirm price. A line of resistance has been drawn through the OBV chart and it still has not broken above that line, volume continues to be light to the upside. If volume picks up this may be what lifts the price in its next leg up.”

Price has retreated in the wake of a Greek Deal, a DDOS attack on OKcoin, and a PBOC that is attempting to stabilize the Chinese markets. Over the last few days, price has traded in a tight range below US$280, unable to remain above. The price fell below a few levels identified as support, i.e. US$300, US$289, and US$280. Price continues to consolidate in the wake of the big June run-up. The big test that must hold is ~US$272, which is the 200 day Exponential Moving Average (EMA).

Long Term

After the big run-up in price and the cross over of the 50 day EMA and 100 day EMA, price has fallen back to consolidate near the 200 day EMA at ~US$272. All the overbought signals in the indicators have corrected themselves and the RSI remains above 50, which is bullish. The Money Flow Index looks bearish here as volume has weakened and it remains on a sell signal.

On Balance Volume (OBV) has never confirmed the move up, which has been concerning for months. Volume has yet to follow price in this up-move. This continues to be bothersome and confirmation in the form of volume with an up-move would allay much of that worry.  OBV tried to break above resistance and failed. 

On the daily chart, the price has lost momentum and looks to be consolidating here awaiting its next move. Caution should be used when putting on a trade here until there is more confirmation.

Chart 1

Ichimoku

The one-year Ichimoku (cloud chart) shows price remaining well above the cloud (the trend is bullish) and in bullish territory. However, price has crossed below the Tanken Sen and Kijun Sen, indicating that momentum has begun to wane. The Chikou San (Lagging Line) has also followed the price lower.  The uptrend is on pause at the moment and the cloud below should act as support. Some areas to watch are ~US$274, US$266 and ~US$260. The cloud ahead remains bullish as well, so price action remains bullish to neutral.

For further definitions of what is being discussed, please refer to this previous post on Ichimoku cloud charts.

Chart 2

Intermediate-Term Trend

Fibonacci retracements have been drawn from two price tops: the mid-November high of ~US$424 and the July 12 high of ~US$310.

Price has fallen below some key levels and is now looking for some support. Key areas are ~US$273, ~US$267 and ~US$262. Essentially that ~272 area is really big for bear term direction and possibly medium term direction as well.

The MACD is correcting as it has been since it went to an extreme condition on the large move up last week. It remains on a sell signal here.

Included is the Directional Movement Index (DMI), which looks at buying and selling pressures. The blue line indicates buying pressure, the red line indicates selling pressure, and the orange line is the ADX, which indicates the strength or weakness of a trend. 

Last week’s price alert noted:

“Buying pressure and the ADX line are very bullish, but are pointing to extreme levels right now. The ADX line can’t really get much higher than it is now. While the bulls are in total control right now, and buying pressure continues upward, ADX is signaling price might look to pause. The ADX line remains above both the Buying Pressure Line and the Selling Pressure Line at very high levels. This puts it on a buy signal.”

The price has come off that extreme reading after the cascading price action last week. Buying Pressure remains above Selling Pressure and the ADX is above both lines but looks to be correcting from an extreme level.  The action is still bullish here, but was due for a snap back.

Last week, the price was above the upper Bollinger Band and had been stretched out since the week before. Volatility and price action have returned, and the Bollinger bands continue to widen as price has been moving. Interestingly enough they have widened considerably since last week even though price has been trading in a tight range. Expect a bigger move looking to set up here or at the very least a fair amount of price volatility.  Price is sitting on the middle band right now, and if it falls below price could follow. Price needs to stay above the middle band.

Chart 3

Short Term

Price barely remains above its short term trendline, holding above ~US$272. Otherwise price is paving the way to fall to ~US$262. The RSI is beginning to move up from an oversold condition while the MFI remains oversold. MACD is below zero and on a sell signal but flat.  Price is attempting to bottom here but will need a catalyst to begin a new up-trend. ~US$279, ~US$282 and ~US$288 will provide upside resistance.

Chart 4

The bulls had seized control and while the charts remain slightly bullish, the bears are attempting to seize the moment. The ~US$272 mark will be the battleground. Lean bullish for now and hope volume follows.

Disclaimer: Articles regarding the potential movement in cryptocurrency prices are not to be treated as trading advice. Neither CoinTelegraph, nor the author, assumes responsibility for any trade losses, as the final decision on trade execution lies with the reader. Always remember that only those in possession of the private keys are in control of the money.

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