As we head into the unofficial last week of the summer, we continue to expect lackluster price action through the long holiday weekend in the US. That said, we are getting closer to a seasonal period that is more conducive to volatility in all financial markets.
Bitcoin has been steady as a rock over the past couple of weeks, much to the chagrin of shorter term traders and market makers. Despite frustration on the part of some market participants, we think it is a good sign to the broader pool of global investors that the largest cryptocurrency has remained so stable following what was one of the biggest exchange hacks in it’s relatively short history.
It is also encouraging that despite mixed technicals on the higher timeframe charts, dumps down into near term support zones keep getting rejected by buyers. While we have no way of telling what the longer term intentions are of these players, we do know that demand remains fairly strong in the face of a neutral to bearish near term environment. We also think it is a good sign that Bitcoin has remained resilient despite some massive rallies in the altcoin space (specifically in privacy-focused coin Monero [XMR]).
Today we return to the 3-day chart for a look at the medium to longer term technical outlook given the short term is so stagnant (and hence rather uninteresting). Notice that price remains in what appears to be a bull flag or descending channel, both of which indicate consolidation within an uptrend. Also note that price is now ranging between the 38.2% and the 50% Fibonacci retracement levels following the Finex selloff down to the support, another relatively bullish signal over the medium term. Additionally, the A/D line is still pressing to the upside despite generally falling prices over the past month, telling us that demand remains swift at these levels.
Conversely, there are still some warning signs that give us caution about getting too bulled up before next week. We can see that Willy and RSI have both flatlined slightly above the 40 levels so a break down below there would be an ominous signal. Also notice that MACD has not put in a divergence of any kind despite moving back to the zeroline, telling us perhaps a retest of lower levels might be in the cards prior to a resolution out of this medium term consolidation..
Finally, we can see that volume profile is still very thin above the $475 level which means that there could be more work to be done in terms of price discovery between $475 and $585 before we get sustained movement out of this trading range. While this may please those looking to accumulate more positions down at these levels, it will continue to perplex and frustrate trend traders considering we will have been in a range contraction for the better part of the summer and that streak looks set to continue for the time being.
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