BTC-China was leading a decline of today's price wave to the downside. The decline reversed at $235.02 (Bitfinex) and 1460 CNY (BTC-Cina). Technical analysis looks at the prospects for the coming days, and we examine the lull in Bitcoin price movement during the past few…
BTC-China was leading a decline of today’s price wave to the downside. The decline reversed at $235.02 (Bitfinex) and 1460 CNY (BTC-Cina). Technical analysis looks at the prospects for the coming days, and we examine the lull in Bitcoin price movement during the past few weeks.
From the analysis pages of xbt.social, earlier today:
At the time of writing the decline seems to be continuing, but divergence ranges from the 5-min chart all the way up to the 1-hour chart. At the 4-hour timeframe, reverse divergence is setting in on the move lower. Conceivably the 4-hour 200MA ($235 Bitfinex / 1460 CNY BTC-China) is the target and should provide support, thereby, terminating the decline.
Later during the day:
Price’s reaction to the Fib lines is interesting, although its intended path is not so clear. What does increase confidence that short-term trend has turned up is the divergence indicated by RSI on the last low. But “Ha!” some might say – “Look at what happened in the left of the chart, despite red divergence dots!” Indeed, well-spotted, yet consider price was in a larger range of motion back then; it was below both descending 20 and 200MAs and had consistently been making lower lows for 5 weeks prior to this final low. This is opposite in almost every regard to the current condition:
At the present moment, price is above an ascending 200MA in the 4hr chart. There have been a succession of higher lows for the past 4 weeks; and, instead of having just fallen through a long-term Fib line, price is currently bumping up against one, apparently seeking to break through resistance.
Being ignorant is not so much a shame, as being unwilling to learn. – Benjamin Franklin
The past 5 weeks have seen a decrease in the range of motion in the Bitcoin price chart and an apparent inability of price to move below $225 and beyond $250. The range has contracted, during the past week, to $230 – $245. The question as to why this is happening has two answers: one is general to markets, and the other, specific to Bitcoin.
In most price charts, there are times when the market enters a period of consolidation, just as we see now. The range of price motion decreases over time and narrows to a virtual flatline. There are two common explanations for this: 1) market participants are unsure about the direction of the larger trend, and 2) the underlying psychological engine of market activity, namely volatility, is ebbing prior to a sudden onset of buying and selling.
The 1-day candle timeframe BTC-China chart, above, highlights times when price action had slowed down and narrowed to a small trading range. Notice that, in each case, the lull was preceded by a surge and followed by a rally. This brings us to the Bitcoin chart-specific reason for the current doldrums, and the repeating pattern can be seen in the chart:
Following significant price corrections the Bitcoin chart, typically, surges and then consolidates before launching into a larger price rally. During the consolidation phase, the volatile activity of the preceding surge ebbs away, as the market quietens down to a price lull and takes stock of what just happened. This phase is characterized by a narrowing of the range of momentum indicators, such as MACD, to almost zero. Then, as if out of nowhere, price begins moving and, in an apparent positive feedback cycle, traders all pile into the direction of trend, thereby, causing a unanimous price rally.
Reading the technical signs in the Bitcoin chart, price is currently in a consolidation phase, forming a base from which it should rally – if the historical chart pattern plays out here.
Various technical analyses explored at xbt.social have put the ETA of the advance between now and the middle of July. The past year’s decline has been formidable and will take time to expend its dying throes in the chart. In the meantime, price may still make some unexpected moves in the established price range since January, but inevitably advance will become the dominant mode. The massive speculative interest in Bitcoin price is, after all, in this super-commodity’s ability to rally unlike any other market instrument in history.
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If Bitcoin price can establish above $238 (Bitfinex) and 1490 CNY (BTC-China), then the probability of continuing advance increases significantly. Keeping below these levels – or falling away from them, over the weekend – opens a can of decline below $230, and alters our longer-term outlook.
Bitfinex orderbook depth and Buy/Sell Volume:
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The writer trades Bitcoin. Trade and investment is risky. Analysis presented here is provided as the opinion of the analyst and xbt.social and stated price directions and targets are not guaranteed to be achieved. Market conditions change rapidly. CCN accepts no liability for losses incurred as a result of anything written in this Bitcoin price analysis report.
Last modified: January 25, 2020 11:05 PM UTC