Bitcoin (BTC) closed out another weekly candle last night, and the main story is that buy support came in during the last hours of the week to propel the leading crypto up and away from the bottom of its local trading range. This ranging has lasted, now, nearly a month, after Bitcoin broke down from a huge consolidation above $10k. The fight to stay above $8k now equals the fight to potentially reverse the developing downtrend.
We start in close with a 4-hour view, and see that Bitcoin’s bounce is already approaching the top of the general trading range (defined by the Volume Profile, not shown). We can expect this rally to continue at least until $8,400, and probably higher where sellers are likely to come in.
For now, we see that the 55 EMA has been sliced through, and we might look for this moving average to be retested before another move up within the local structure. We must note that this bounce, coming in the evening of October 20 (UTC), was not attended by a lot of buy volume; it was merely the absence of sellers that allowed the pump (Bitstamp).
Moving up to the daily chart, we must note that Bitcoin’s last attempt to break the structure was foiled at the 21 EMA; and if it can close today above this level, we might consider the possibility of breaking to the upside in the near future. With the volume in general decline, we have to expect some larger move to come soon whether up or down.
On the weekly chart, with a freshly closed candle, we see that there is clear support at the 55 EMA. The general signs of a downtrend are here, with the 8 EMA crossing bearish under the 21 EMA, and the general look of this formation as a bear flag preceding another move down. Volume was slightly lower than the previous week, despite the bounce.
However, looking on the weekly indicators, we see long term signs of strength. Bitcoin is likely looking for the bottom of its drop out of $10k, and the histogram as of last week is mostly flattened out and looking ready to curl up. At time of writing, it already is curling up, but of course it is much too early to make any observations here.
Another item of note here is that BTC has held at about 45 on the RSI, which is an important location on this chart, being Bitcoin’s level just before its bear market capitulation in 2018. We can also note that it has retraced nearly to its “golden pocket” on the Fibonacci scale, which will be a likely place for serious buying to come in.
Overall, we still have an intact downtrend on the higher timeframes. It would be nice to reverse this in the coming week or so, but there is no reason to predict this yet. However, the declining volume suggests a bigger move is coming soon.
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