Last week we said:
Bitcoin is beginning to look quite bullish, and the worst of the bear market appears to be over. BTC is breaking important resistances and setting up new support zones on the 4H, and is testing a key price point in the weekly (200 SMA). With a confluence of resistances around the key area of $22.6-22.7k, I do not expect BTC to break resistance upon the first attempt. However, a key indicator to watch is if BTC breaks and holds above the $22.7k mark on the weekly chart.
Our prediction of a bullish move and resistance at the $22.7k mark proved to be accurate! On the 19th, BTC tested the $22.7k zone and retraced to local support before breaking out to $24k. As the weekly close approached, BTC retraced its price and closed the weekly candle at $22.6k (just below the weekly 200 SMA). Currently, BTC is falling, trading at the $21.9k mark.
Let’s take a look at the charts and see if we can predict BTC’s next move.
Bitcoin Price Analysis
We can see on the 4H chart that the 50SMA acted as support, just as we would expect. However, after several retests this support zone failed and BTC is now consolidating beneath the 50SMA. This is a bearish divergence. The moving averages are still in a bullish configuration, however. The 100SMA appears to be acting as a support zone, currently at $21.6k.
After touching off $24k, the RSI has been slowly resetting. Though it is not yet oversold, the Stochastic appears to be at the bottom of its range – signaling that a short term bounce from here is likely.
From the daily perspective, the moving averages are still in a bearish configuration. For the first time in several months, the price has caught up to the 50SMA and briefly traded above this important level. However, today the price is falling beneath the 50SMA. This could be a potential bearish divergence, as it could be viewed as a rejection off the 50SMA. It will be important to watch the daily close for the next few days to see if this rejection is validated. Key price point is $21.9k.
The momentum indicators on this timeframe do not look good. The RSI is neutral ( and declining) and Stochastic has a ways to fall, indicating that further downside is likely. This raises the probability that BTC will reject off the 50SMA and continue its decline and/or consolidate before retesting.
The weekly chart appears mixed. BTC closed its last weekly candle just beneath the 200SMA, and has begun this week in the red. If this week significantly declines from the 200SMA, it could be viewed as a rejection – which would be very bearish. However, the RSI and Stochastic both remain oversold – so a major dump from here is not likely. Even if the 200SMA rejects, I expect a minor price decline and consolidation before a retest. Key resistance at this level is now $22.8k (weekly 200SMA).
Bitcoin Investor Sentiment
The FGI is still reading “fear” and rightly so – BTC is not out of the woods yet. Investors’ fears may have subsided a bit with BTC trading at $24k last week, but falling back beneath the weekly 200 SMA should be cause for concern. If a rejection forms on the daily and weekly charts, I expect market sentiment to return to “Extreme Fear” which will present a good buying opportunity.
Bitcoin Fundamental Analysis
Markets of all types have been significantly influenced by the actions of the United States Federal Reserve, which is set to meet again this week to hike interest rates once again. It is expected to see another 75bp hike. These hikes have typically sent markets reeling in the following days / weeks. While much of the fear is already priced in, recent trends may hold. This aligns well with the bearish indicators we are seeing on the charts, raising the likelihood of further consolidation before the market rally we are waiting for finally materializes.
The 4H and Daily both look bearish, and potential rejections off of key price levels may be forming on the daily and weekly. It will be important for BTC to close the next few days above the key $21.9k price level, and the week above $22.8k in order for bullish narratives to resume. With the FOMC meeting this week, it is likely we will see markets sell-off in the short term, pairing up with what we are seeing on the charts. If BTC manages to hold above the $20k level despite market turmoil, it has a good chance to regain momentum in the coming weeks for a late summer / early fall market rally.
- $21.6k (local)
- $20k (psychological)
- $21.9k (local)
- $22.8k (weekly 200 SMA)
Not investment advice. Do your own research.