Last week in Bitcoin Price Analysis we said:
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.
It’s not looking good for BTC. Our prediction of a continued pullback and consolidation has proven to be correct, but the $23.6k support zone failed to hold after multiple retests throughout the week. Currently, BTC is trading just above the $21k mark.
Let’s take a look at the charts and see if we can predict what’s next.
Bitcoin Price Analysis
The moving averages are moving into a bearish configuration, after the price has fallen through all three levels. The 100SMA is about to cross beneath the 200 SMA in the coming days, setting up the charts for a “Death cross” pattern. BTC is likely to face resistance at the $23k mark now, which is the 4H 200 SMA.
Our short term momentum indicators are not looking good either. Despite sideways consolidation, the RSI has been rising out of an oversold zone and the stochastic is actually overbought. This is clearing the way below for a further drop and is characteristic of a bear flag.
Daily moving averages remain in a bearish configuration following a rejection off the 100 SMA. This area will continue to act as resistance, currently priced at $24k.
There is a glimmer of hope looking at our daily momentum indicators. The RSI is finally nearing an oversold point, and Stochastic is already there – signaling that a short term bottom could be close.
The weekly chart is not looking too good either. Last week’s violent dump sent BTC below the 200w SMA – a key support level that will now act as resistance at $23.1k. Adding to this is the fact that the Stochastic is peaking. The combination of these indicators makes the past two months of sideways / slightly up price action appear to be a bear flag.
Bitcoin Investor Sentiment
Despite last week’s dump and poor price TA, investor sentiment has not yet returned to extreme fear. This signals that there is more pain to be found before a bounce could occur. Typically we wait for sentiment to hit extremes before taking a contrarian position.
Bitcoin Fundamental Analysis
Glassnode reported last week that BTC broke below the realized price level of $21.7k last week, signaling that the market is in an aggregate loss. The $21.7k mark is a key level for BTC to reclaim.
Bitcoin’s total hash rate has stabilized above the 200 TH/s over recent weeks, showing that the network has recalibrated to the new price level. Typically large declines in hash rate correspond with large price corrections.
With bear flags forming on the 4H and weekly charts, a pending death cross, and the loss of key price levels, things are not looking good for BTC in the short / medium term. A retrace to the psychological $20k level looks likely in the coming days/weeks, as momentum indicators need to reset and consolidate before any bullish momentum can be regained. Fundamentals look shaky, and a global economy on the edge of recession spells future pain for BTC. Good times will come again, but there will be buying opportunities along the way.
- $20k (psychological)
- $17.6k (previous bottom)
- $21.7k (realized price)
- $23.1k (200w SMA)
Not investment advice. Do your own research.