There have been two Bitcoin (BTC) movements since the leading crypto’s breakdown in late September: the breakdown itself, and A subsequent relief rally. The relief rally has come and gone, though, and the trend seems to remain down -- but there are signs of strength.
We start with the weekly chart that closed yesterday, and there are many things to note. First, the volume on the weekly candle nearly matched the previous week’s, but this was nowhere near enough to break the developing downtrend. The candle didn’t even retest the 21 exponential moving average (EMA), and had a powerful sell wick back down to $8,300 signaling a lack of buy support. However, the 55 EMA has been consistently held, and now forms the bottom of our local market at about $7,800.
We note that the histogram is recovering on this timeframe, and flattened out so far in the few initial hours of the new week. This is an encouraging indication that $7,800 may in fact be the bottom of the down trend.
If we move to the daily chart, we can note a pretty strange pattern on the histogram: a nearly completely flat plateau in the last four days, on the positive side of the range following the brief counter-rally. Likewise, price is locked in above $8,100, near the top of the $8,400-7,800 range, and just under the 8 EMA.
If today’s daily can actually close above the 8 EMA, we could have another attempt to break the downtrend here. The RSI is also uptrending nicely, making higher highs and lows. It seems like Bitcoin has a chance here to effect a reversal and end what would be a short downtrend out of the breakdown, and a move soon is likely given the low volume.
Finally, if we look at the Bitcoin dominance chart -- which has lately been giving back a few percentage points of market dominance -- we see some signs of possible strength. This may suggest a bump in the dominance back closer to 70% -- a level which is quite overbought in the post-2017 crypto ecosystem.
In sum, Bitcoin’s general look of a downtrend must remain intact. The relief rally off of the late September breakdown wasn’t enough to break back into the old consolidation zone, and it seems unlikely that a multi-month consolidation could so quickly bounce back from a breakdown. But it is still possible, and Bitcoin does show some signs of strength at present. However, we should not be surprised to see another leg down to the low $7k area in the coming week, as it would be appropriate.
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