It now seems perfectly clear: Bitcoin (BTC) has confirmed a larger downtrend that may take some time to play out. The hopes of a reversal to an uptrend, after the July-October retracement from $14,000, are now baseless. And although it is not, of course, impossible – this being Bitcoin – we should not expect a dramatic reversal for the leading crypto any time soon, as the technicals do not bear this narrative out.
Starting with the weekly chart, which closed yesterday, we first notice that price closed the week far below the key 55 EMA, which served as robust support through October. The EMA “fan” is, in general, clearly collapsing now, with the 13 and 21 EMAs about to cross bearish under the 34.
Bitcoin also closed below the neckline of its entire market structure since June, and is now well within the bands of support/resistance that were important during the 2018 bear market.
If we continue on the weekly chart with indicators, we can see that the RSI has broken below the capitulation level from the 2018 bear market. At that time, price quickly fell to almost $3,000. Instead, price has here fallen into the 2018 consolidation zone, generally between $6-7k (blue-grey-blue bands).
The histogram here has taken a very sharp arch down for the weekly close. It will be important to see, next week, how this down-arch profile develops: Will it go flat, increase its velocity down, or begin to contract back to the upside? We can also note here, that volume on this breakdown (Gemini exchange) has not been considerable relative to other dramatic price movements during 2019. This fact may help to soften the bearish narrative, suggesting a lack of buyers rather than a rash of sellers.
Finally, finishing with another weekly chart with dominance comparatives, we see Bitcoin’s market dominance continuing to hold at about 67%. But, like Bitcoin's price downtrend, seems to be downtrending and repeated testing of this zone may see a break.
Adding to this, we see the “Others” altcoin dominance (mid-cap altcoins and below) continuing to rise, having broken out of the 6% resistance. We should watch this trend, and be on the lookout for a continued shift of capital into altcoins – which is likely if Bitcoin gets itself into a gentle consolidating trend.
Just based on these weekly charts, we can definitely read a general Bitcoin downtrend. But, it’s possible – owing to the weak sell volume – that the worst is already over within that larger downtrend. Support around the $6k area should generally be very robust, having been an extremely dense trading area from 2018. One thing seems certain, though: there won’t be much talk of Bitcoin this year at the various holiday tables (for better or worse).
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