Last week we said:
BTC is testing $10.4k, but with an imminent death cross on the local hourly chart, a retest of the 10k zone is possible if not likely. I would expect this to be a quick touch, “wicking” below the 100MA on the daily chart but closing the day above 10.4k.
Could our analysis get any better?? Once again, we hit the nail on the head with our prediction. Just like we predicted, BTC wicked down to the strong $10k support zone, reaching a low of $10,137 before rocketing above the $10.4k zone:
After finding support in the 10.3-10.4k zone, BTC shot up again, forming a double top at $10940 and then retracing:
Since the local top, the top cryptocurrency has been trading in the 10.6k – 10.7k range, forming a consolidation pattern and gearing up for its next move. Let’s continue our weekly analysis and try to get a leading edge on what the market will do in the coming days!
Price Analysis
From the 4H chart we can already see that BTC is forming a wedge pattern, which in this case I would view as bullish. Since the wedge is a neutral wedge and the support is trend support, the likelihood is that it will break upward just as it did in our last wedge. Markets tend to perform in cycles.
Another possible scenario is that Bitcoin is forming a long term bull channel on the 4H chart. This would be confirmed by a move back to the $12k price level.
The 1D candle chart makes the bull channel even clearer, especially with the 20MA bouncing off of the 100MA as support. If BTC makes a strong move upward in the coming days, this theory could be confirmed. If not, expect a longer consolidation period.
Investor Sentiment
The Fear Greed Index is still showing “fear” – indicating that the market may not have topped out yet. Remember, we always trade contrary to the market sentiment. A contrarian mindset when trading can be quite profitable. Never trade out of emotion.
Both indexes agree that the sentiment is slightly fearful. This is slightly less fearful then last week, which measured around a 39 on both sites, which should be expected since the market moved upward. Since the dials are not showing “greed” – I view this as slightly bullish.
Fundamental Analysis
The mining hash rate has declined a bit since last week, but is currently rebounding. Still, levels are near all time highs, which is bullish if you believe in the inherent value of Bitcoins. This means that competition for mining Bitcoins is at an all time high, and so is Bitcoin’s carbon footprint! The inherent value of BTC is directly correlated with the amount of electricity it takes to mine one (mining cost).
Even still, compared to all time high mining revenues, currently miners are not making much. This is largely due to the block halving. Keep in mind that miners are good traders, and would sooner stop mining than sell at a loss. For BTC to return to all time high mining revenues, the price would have to nearly 5x.
Conclusion
Last week we saw a rather bearish scenario, but since the $10k level held we now see either a consolidation phase (neutral wedge) forming, or the confirmation of a bull channel. With investor sentiment neutral and/or slightly fearful, there certainly will be buyers at this price level. Combine this with extremely strong fundamentals and the bull case for BTC is quite strong at this moment. To confirm the bull channel, a return to $12k is needed. Likewise, both theories could be invalidated if BTC returns to the $10k level and fails to hold yet again. For now, it’s looking like the days of sub $10k BTC are over.
Always do your own research before making an investment decision. This article is for educational and entertainment purposes only.
