Last week in Bitcoin Price Analysis we said:
The 4H chart looks primed for a pullback or consolidation, while the daily and weekly look bullish. Investor sentiment remains fearful, which is slightly bullish, and fundamentals are neutral. This sets the stage for a neutral / bullish tilt in the short term, while retaining bullish biases in the long term. BTC holding above the 200 weekly SMA is very bullish, and suggests that the worst is over.
We called for a short-term pullback as price indications on the 4h chart looked bearish, but held our bullish bias for medium and long term. This is precisely what played out. Two days after our article, BTC pulled back to $22.6k and then held above the 200w SMA, followed by pumping up to $25k where it met resistance. Now, BTC is trading back at the $24k zone where it is consolidating.
Let’s take a look at the charts this week and see if we can predict BTC’s next move.
Bitcoin Price Analysis
Moving averages on the 4H are still in a bullish configuration. The price is currently testing the 4h 50 SMA, which has acted as support on the last few retests. This support is at $24k. Below this, the 100 SMA will act as support at $23.6k, and then the 200 SMA at $22.9k.
The RSI is neutral and stochastic is oversold on this time frame, so it is likely that the dip is nearing its bottom. This makes it also likely that local support at $23.6k – 24k will hold nicely.
Bearish divergence on the daily chart is visible as BTC has rejected off the daily 100 moving average. This level will act as resistance at $24.7k. Support is below at the daily 50 SMA, priced at $22k.
Daily RSI is still neutral but is grinding toward overbought. Daily Stochastic is in the overbought range, signaling that a period of consolidation or retracement could be seen in the coming week or so.
The RSI is still close to oversold, but the Stochastic is beginning to hit its overbought range. The price has held nicely above the 200 week SMA, now priced at $23k, which should act as support. However, overbought Stochastic suggests that we could see a sharp retracement back into oversold levels in the coming months as the indicator resets and gathers momentum. Slightly bearish/neutral. But if the chart holds above the 200 week SMA, all bearish bets are off.
Bitcoin Investor Sentiment
Sentiment has been slowly improving over the last several weeks, and is nearing “neutral” levels for the first time since March. This is a macro bearish move, since sentiment is improving at a relatively low price point, and gives bears more room for max pain.
Bitcoin Fundamental Analysis
BTC has been tracking with the global economy which has been improving since June. However, China unexpectedly cut rates last night – sending markets a clear signal that economic recovery may not be as sturdy as markets would lead you to believe. This sent commodities pricing, and BTC, falling overnight.
Glassnode data shows that BTC’s hashrate has been in decline over recent months, but a 30 day moving average could signal that the network is stabilizing at these levels.
Conclusion
BTC is in the midst of a pullback. In the short term, $23.6-24k support seems likely to hold, as indicators on the 4H show the stochastic in an oversold position. The daily chart seems to be rejecting off the 100 SMA, suggesting that further consolidation and possibly a retrace to 50SMA support could be necessary. The weekly chart is beginning to look shaky as the stochastic is reaching overbought levels, but RSI remains near oversold. If BTC makes a convincing close below the 200w sma, we could see a violent dump that resets our long term momentum indicators.
Support Zones:
- $24k
- $23.6k
- $23k (200w SMA)
Resistance Zones
- $24.7-25k
- $28k
Not investment advice. Do your own research.
