Bitcoin Rally Fizzles and Returns Consolidation, A Retest of Lows Looms - Price Analysis

  • Short term: generally unclear near end of consolidation pattern
  • Long term: picture remains bullish, but a breakdown could see test of longer uptrend

A brief uptrend after a bounce off of the $10k lows has been quickly squashed just under $11,000, and Bitcoin (BTC) has been sent back down looking rather shaky. A looming end to a probable consolidation pattern presents the possibility of a break down below $10,000.

Starting with the daily chart, we see that price has plunged through both the 21 and 55 exponential moving averages (EMAs), as well as the important block of support/resistance surrounding $10,600. What is alarming here is the sell volume: not even half way through the trading day at time of writing, sell volume looks poised to easily outstrip yesterday’s bar.

Nearing end of patternBTC chart by TradingView

After last night’s dump, Bitcoin is already getting dangerously close to $10,000 again, a zone it fought hard last week to leave behind. And with a consolidation period looking to climax within the next week, yet another retest of $10,000 will be dangerous: the market could decide to break down here while crowding the $10k zone.

If Bitcoin is not able to hold $10,000, we could be looking at another trip down to $9,000 - and possibly further. We can see below some respect, since late June, of the limits of a downtrending channel, the bottom end of which could take Bitcoin below $8,000 heading into September.

Worst case scenarioBTC chart by TradingView

We also see that volume - here the Gemini exchange - is generally downtrending throughout this entire channel formation. This suggests a very large consolidation of one kind or another, with attendant breakout in volume.

Looking at the 4-hour MACD and chart, we see the considerable - relatively speaking on low timeframe - volume that has come with the abrupt selloff. The EMAs have been completely left behind here. But, we can see that the MACD is already recovering and arcing up at time of writing - so the picture is quite hazy.

MACD turning up after dumpBTC chart by TradingView

On the RSI, below, we can see that a lot of strength has been lost on the 4-hour chart versus price. We could easily see a bear flag here and another dump below

Big hit to RSIBTC chart by TradingView

All in all, the short term picture is unclear. Retesting the $10k zone is shaky, especially doing so at the tail end of a consolidation pattern (if that is what we have). Bitcoin will need to pull another bounce out of its sleeve at $10k to remain in the pattern if it gets any lower - and that may be hard to do.

The views and opinions expressed here do not reflect those of and do not constitute financial advice. Always do your own research.