It’s now the third week after Bitcoin (BTC) broke down from its consolidation pattern, and we’ve yet to see another major drop from the $8,000 area. But considering that the trend now looks likely to be down, we can reasonably expect that $8,000 will not hold for much longer — but here, there are some counter-signs. In addition, Bitcoin dominance is now rapidly waning, opening up the potential for altcoin rallies — and indeed, we are starting to see some major altcoins pop off.
Starting on a Bitcoin weekly chart, with an “EMA fan” overlay (common exponential moving averages), we see something pretty worrying. The EMA fan crossed fully bullish in June, when all moving averages aligned in sequential order with smallest at the top. Now, we are starting to see this fan collapse, with the 9 EMA crossing over the 13. EMA fans, whether bullish or bearish, are important indicators of trend, and they carry more weight the higher timeframe they are on — so this looks like another sign of a breaking bull trend.
Another thing we can observe, however, is that the 55 EMA has held the past two weeks. This may give us some hope that Bitcoin can in fact hold out at this critical level and start reversing.
Looking on another weekly chart, with volume and Fibonacci overlays, we see that volume dropped during the week following the selloff (last week). We can take this as a sign that sell pressure has dissipated a lot. We also see that, on a full retrace from December 2018, price has not yet tested the Fibonacci “golden ratio” between 0.618-65, meaning there is still another emergency support zone below.
On the weekly histogram, we see the trend arching back up, although it is too early to draw any conclusions from the present week. If this trend up can maintain, we might not see much more downside.
Coming down to the much shorter 4-hour chart (above), we see that Bitcoin has been respecting a descending channel, and is stuck under the 21 EMA. There is a lot of chop here, but generally bulls have been very unwilling to let the leading crypto lose $8,000 for long. If Bitcoin can close above the 21 on this chart, we may anticipate a move back to the top of this general market structure at $8,400; and if it can’t, we’ll get more pressure for $8,000 to break.
Finally, Bitcoin dominance continues to fall, and is breaking an important level. This is giving altcoins a chance to breathe, and we’re seeing some gains in the altcoin markets — which we will cover later today. As long as Bitcoin doesn’t get too dramatic, it could be a good time for altcoins.
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