Just as Bitcoin (BTC) yesterday looked to be hanging onto $10,000 after a counter rally to the upside, last night a massive wave of selling across the markets sent the leading crypto tumbling back out of what had been promising consolidation between $11-13,000.
What was notable about yesterday’s selling was the massive volume that attended, breaking what had been the trend of decreasing volume in general.
Looking at the 12-hour Bitstamp chart, we can see that yesterday’s selling saw the highest volume (Bitstamp is a good representative of the market) for Bitcoin since June, breaking a consolidation which had roughly tracked the 66 exponential moving average (EMA).
The first support zones in the low 9,000’s have caught the present dump. A small counter-rally is somewhat likely here, but it is nearly impossible to have any legs. Most notable about this downside is the loss of the 66 EMA.
We have often talked about the importance of this EMA here (also the 200 on the 4-hour, and 33 on the daily charts). A break of this level signals a break of Bitcoin’s entire 2019 uptrend. As a result, we must acknowledge that the short term trend is now down - although medium and long term uptrends are still intact (we will cover this in a different article).
Zooming in a bit, on the 4-hour, we can see no strength showing up on the indicators yet. Here, the 21 EMA seems to be holding the tiny counter-rallies, and we might expect some selling there.
RSI is trending down with no divergences from price; and the histogram has been unable even to stay within a shallow uptrending divergence. There is no volume to defend this level. Basically, it looks like lower levels are guaranteed.
We covered a few days ago what some medium term support targets might be for Bitcoin - again, assuming that the long trend uptrend holds.
Generally, the wide zone around $8,000 contains a confluence of supporting indicators, which suggest a Bitcoin correction to be held around there. For now, we can say that sub-$9,000 is more than likely, owing to the lack of strength at this level.
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