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Short-Term Bearish Reversal
BTC: Price: $9,450 | MCAP: $168 billion | 24-Hr Volume: $27.13 billion
Short-term trend: Bearish
Bitcoin fell 13.25 percent on Tuesday, its second-biggest daily loss of 2019. More importantly, prices closed below $9,614 yesterday, invalidating the bullish higher lows pattern on the daily chart.
So now, the path of least resistance is to the downside, more so, as the 14-day relative strength index (RSI) is now reporting bearish conditions with a below-50 print. Further, the Chaikin money flow index is close to turning negative, a sign of transition from buying to selling pressure.
As a result, a deeper drop toward the 100-day moving average (MA) support, currently at $8,120, cannot be ruled out.
BTC, however, may chart a bearish lower high near $9,800 or $10,000 before falling to levels below $9,000, as the RSI on the 4-hour chart is currently reporting oversold conditions.
Long-term trend: Bullish
Bitcoin closed last month with 25.89 percent gains, confirming a five-month winning streak, which is the longest since 2017.
With the double-digit gains, the cryptocurrency further cemented the falling channel breakout witnessed in April. The 5- and 10-month moving averages are trending north, indicating a bullish setup. As a result, the path of least resistance is to the higher side, more so, as the cryptocurrency is set to undergo mining reward halving sometime in May 2020.
Hence, investors may view any pullback to levels near $8,000, as just another chance to get involved in the bull market.
The outlook will remain bullish as long as prices are held above the 200-day moving average, currently lined up just below $6,000.
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ClipperCoin Goes Solo on Breakout CCCX: Price: $0.0203 | MCAP: $80.5 million | 24-Hr Volume: $50,700
Short-term trend: Pullback post breakout
CCCX is the only crypto in the green today in the top 100 at CoinMarketCap, up 10.56 percent over a 24-hour period after breaking bullish from an ascending triangle formation on the daily chart.
Total volume has been very light as of late however, indicating that the rally may be short-lived and that prices will likely pullback to former resistances near $0.0194 before deciding on a fresh short-term trend.
Long-term trend: Bullish
The long-term trend remains bullish, given its current trajectory of higher highs and higher lows, beginning May 25 and demonstrating a willingness to push further amid favorable market conditions. Bitcoin's (BTC) recent breakdown will certainly cause greater swings in CCCX's overall formation, but time will tell on whether or not the impact to its future growth is sustainable or if the rally for 2019 was short-lived.
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| ICON Feeling The Heat ICX: Price: $0.23 | MCAP: $128.7 million | 24-Hr Volume: $128.7 million
Short-term trend: Bearish
ICX has taken the brunt of bitcoin's (BTC) most recent sell-off, down 30.29 percent over a 24-hour period, it stands as today's worst performing crypto in the top 100 according to CoinMarketCap data.
There is hope for a rebound from oversold territory on the daily RSI, but that will need to be accompanied by a strong showing in bull volume and a histogram (green bar) tick up on the awesome oscillator.
Long-term trend: Bearish
Having fallen beneath the 100 and 200 daily moving averages at $0.35 and $0.31 respectively, the trend has therefore switched bearish long-term until the bulls can muster enough momentum to push prices back above in order to re-establish their dominance.
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Ever read a technical analysis note or tweet? It often talks about the need for “confirmation” of a bullish or bearish trend change on the price chart.
For instance, the July 2 low of $9,614 was key price support for bitcoin, according to Bitstamp data. The level essentially represented bullish higher lows pattern on the daily chart.
An intraday break below that level, however, would not have qualified as bearish reversal. Often, an asset prints intraday lows below key supports only to rise back quickly, trapping tyro traders on the wrong side of the market.
Hence, seasoned traders usually wait for confirmation of breakdown in the form of a daily close (UTC) below the key support.
For instance, BTC not only hit intraday lows below $9,614 yesterday but also closed at $9,366 – well below $9,614 – “confirming” invalidation of bullish higher lows pattern or a short-term bullish-to-bearish trend change.
Had prices closed well above. $9,614, the resulting long-tailed candle would have meant an end of the pullback from the recent high of $13,800.
Apart from daily close, traders also take additional confirmation from volumes, trends following indicators like the relative strength index and the moving average convergence divergence.
For instnce, if a breakout or breakdown isn’t backed by strong volumes, then it is often considered a warning of a bull or bear trap.
All-in-all, seeking confirmation helps traders differentiate from legitimate and fake moves. That said, most traders, especially the newbies, often ignore the confirmation aspect of chart analysis and end up being on the wrong side of the market.
Put simply, confirmation is the most underrated strategy, as tweeted by @JacobCanfield. |
With a drop to levels near $9,100 today, BTC has reversed almost entire rally seen following the Facebook’s unveiling of its cryptocurrency Libra on June 18.
Back then, BTC was trading around, $9,100. A majority of analysts were expecting a “sell the fact” pullback following Facebook’s announcement.
After all, the cryptocurrency had rallied by nearly $9,000 in the preceding nine days.
BTC, however, remained flat lined above. $9,000 on June 18 and resumed the rally on the following data, eventually hitting a high of $13,880.
Moreover, the narrative that Facebook’s fiat and government-bond backed cryptocurrency would boost bitcoin’s appeal became entrenched after June 18, sending the top cryptocurrency above $10,000 for the first time March 2018.
However, over the last few days, the narrative has changed somewhat with growing calls for regulation of Libra and cryptocurrencies in general.
Now many in the investor community are beginning to worry that Facebook’s project will end up fast-tracking regulations or the crypto market.
As a result, the cryptocurrency has come under pressure and has surrendered entire gains seen after June 18.
Looking forward, a deeper drop toward $8,000 cannot be ruled out. Note that the market began pricing the goods news – Facebook’s foray into cryptocurrencies – when BTC was trading near $7,500.
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| Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments. |
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Settling Below $10K