Bitcoin price has declined steadily from near $300 for most of the past week. Today, saw the first signs of the decline halting as price ran into the 4-hour chart’s 200MA near $276 (Bitstamp).
Time of analysis: 17h19 UTC
From the analysis pages of xbt.social, earlier today:
A look at the larger 4-hour timeframe chart, and a few things to note here:
1) The stochastics (top) have now grouped at their lower extreme, but there is not yet any indication of divergence as we’d expect at the conclusion of a large decline. The previous example (circled) shows the blue divergence dots we want to see. MACD (bottom) similarly is not making any divergence indication. We should expect price to decline until there is divergence in both of these indicators.
2) RSI (second from top) is coded to indicate reverse divergence with red dots. We would expect RSI to also form regular divergence on the final low – along with MACD and the stochastics. At the moment there is no regular divergence to the new price low. Implication: at least one more low at some later time.
3) The MAs are on the verge of giving a sell signal, unreliable as it may be at this slow timeframe. If the green 20MA were to cross below the red 200MA, that would be bearish. The 200MA has a magnetic quality and there is a higher likelihood that price will first consolidate to it before declining below it. In the process, a cross-over may be averted.
The overall impression is that more decline is likely – although several xbt.social members, including myself, have voiced the opinion that below $270 seems unlikely. So we have a preferred scenario of the decline halting above $270 and we potentially have an undesirable scenario of a large slow decline back to the 4-hour 800MA near $250 – if a 20MA/200MA cross-over occurs and price breaks lower.
Today may see a drop to a new marginal new low under the 200MA and a quick reversal back to the 200MA – as mentioned above: price has “come back home” to the 200MA and is unlikely to stray too far.
Remember the clever speculator is always patient and has a reserve of cash. – Jesse Livermore
Continued Bitcoin price decline may happen in the coming days – there are some technical indications in the chart that imply at least one new price low. However, looking at the price pattern and its balanced structure since the $318 top, now might be the time for a consolidation prior to the next leg of advance.
Bitfinex orderbook depth and Buy/Sell Volume:
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