Bitcoin’s price failed to hold above 60,000 on Wednesday.😔
The decline followed a brief surge after Federal Reserve Chair Jerome Powell’s recent speech at Jackson Hodl err Hole.
The past three months have been tough for orange pill poppers around the world, with bitcoin declining over 12% and its continued failure so far to retest its recent all-time high of nearly 74,000 reached earlier this year.
Analysts suggest that profit-taking by crypto traders and low trading volume during this time of year may be contributing to the drop.
Despite this, bitcoin continues to see inflows into U.S. spot bitcoin ETFs, indicating sustained investor interest. However, concerns that the U.S. government may be selling seized bitcoins could be putting additional pressure on prices.
The recent correction may also signal a return to more stable levels after the initial boost from anticipated Federal Reserve interest rate cuts.
What about bitcoin’s technical outlook?
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Welcome to TA of the Day (TAOTD)! 👋
Let’s focus on the current technical setup of the bitcoin (BTC/USD) based on the daily chart:
📈 Technical Analysis of BTC/USD Daily Chart
Let’s analyze BTC/USD using key technical analysis concepts covered in our forex course.
Exponential Moving Averages (EMAs):
- 10-period EMA: Positioned around 61,046.16. The price is currently below this level, indicating short-term bearish momentum. The downward slope suggests recent selling pressure in the short term.
- 20-period EMA: Positioned around 60,940.00. The price is below this level, reinforcing the short-term bearish trend. The downward slope of the 20-period EMA indicates increasing bearish momentum.
- 50-period EMA: Positioned around 61,575.91. The price is also below this level, confirming medium-term bearish momentum. The downward slope suggests that the medium-term trend is favoring the bears.
- 200-period EMA: Positioned around 59,613.08. The price is currently near this level, indicating that the long-term trend is being tested. The slope is relatively flat, suggesting a potential area of support.
Keltner Channels (KC):
- Upper Band: Positioned around 66,434.81. The price is well below this level, indicating that the recent price action has been bearish and closer to the middle and lower bands.
- Middle Line (20-period EMA): Positioned around 60,940.00. The price is currently below the middle line of the Keltner Channel, indicating a bearish bias.
- Lower Band: Positioned around 55,445.19. The price is closer to the middle of the channel, indicating that there is potential room for further downside towards the lower band if bearish momentum continues.
Moving Average Convergence/Divergence (MACD):
- MACD line (2.47) is above the signal line (-161.27) Both lines are above the zero line.
- Histogram is positive but decreasing, suggesting weakening bullish momentum.
🕵️ Key Observations
Price Action:
Let’s analyze the price action of bitcoin (BTCUSD) from its last swing high at the end of July:
- End of July Swing High: The price reached a local high of around 70,000 at the end of July.
- Initial Pullback: Following this peak, there was a sharp pullback. The price dropped to around 65,000, creating a significant red candle.
- Consolidation: After the initial drop, the price consolidated between roughly 65,000 and 68,000 for a few days, forming a series of smaller-bodied candles.
- Renewed Selling Pressure: In early August, selling pressure intensified. The price broke below the consolidation range, dropping to around 62,000.
- Attempted Bounce: There was a brief bounce attempt back to about 65,000, but this was quickly rejected.
- Sharp Decline: Mid-August saw a dramatic drop. The price plummeted from around 65,000 to a low of about 55,000 in a single day, forming a long red candle with a significant lower wick.
- Volatile Recovery: Following this sharp decline, there was a strong bounce. The price recovered quickly to around 60,000-61,000 over the next few days.
- Resistance at Previous Support: The 60,000-62,000 area, which previously acted as support, has now became resistance. The price struggled to break above this level convincingly.
- Range-Bound Trading: Bitcoin entered a range-bound phase, oscillating between roughly 58,000 and 62,000.
- Failed Breakout Attempt: There was a brief attempt to break above 62,000 but this was quickly rejected.
- Recent Downward Pressure: The most recent price action shows renewed downward pressure, with the price dropping back towards the lower end of the recent range, around 59,000.
- Lower Highs: Each attempted recovery has resulted in a lower high compared to the previous peak, indicating weakening bullish momentum.
- Higher Lows: Despite the overall downtrend from the July high, the price has been making slightly higher lows since the mid-August drop, potentially forming a descending triangle pattern.
In summary, the price action since the end of July swing high has been predominantly bearish, characterized by a series of lower highs and increased volatility.
The market has transitioned from a clear uptrend to a more uncertain, range-bound environment with a slight downward bias. The price is currently consolidating in a tightening range, suggesting a potential for a significant move once this range is broken in either direction.
Key Levels:
- 60,000: Important psychological level and near the 20 EMA
- 65,000: Recent resistance level
- 55,000: Strong support level (lower Keltner Channel)
Support and Resistance Levels:
- Major resistance: 65,000-$66,000 (recent highs and upper Keltner Channel)
- Immediate resistance: 61,000-62,000 (20 and 50 EMAs)
- Immediate support: Around 58,000-59,000 (recent lows and 200 EMA)
- Strong support: 55,000-56,000 range (lower Keltner Channel and previous lows)
🤔 Potential Trade Scenarios
Long Bias:
- Consideration Point: Consider entering a long position if the price finds support at the 200-period EMA and begins to show signs of reversal, such as a bullish divergence in the MACD or a strong bullish candlestick pattern.
- Invalidation Point: Consider setting a stop-loss below the 200-period EMA at around 59,000 to manage risk.
- Potential Target: Look for a move back towards the middle Keltner Channel line at 60,940 or higher if a reversal occurs.
Rationale: The 200-period EMA could act as a strong support level, and any signs of bullish reversal could present a buying opportunity, particularly if the broader market sentiment improves.
Short Bias:
- Consideration Point: Consider entering a short position if the price breaks below the 200-period EMA at 59,613 or if there is a bearish continuation pattern on the lower timeframes. Another potential entry point is a rejection at the 10-period EMA.
- Invalidation Point: Consider setting a stop-loss above the 20-period EMA at around 61,000 to manage risk.
- Potential Target: Look for a move towards the lower Keltner Channel band at 55,445 if the downtrend continues.
Rationale: The strong bearish momentum, confirmed by the MACD and the price’s position below the middle Keltner Channel line and all key EMAs, suggests further downside potential. The 200-period EMA is a critical level to watch, as a break below it could lead to a significant sell-off towards the lower Keltner Channel band.
📝 TAOTD Summary
Bitcoin is showing a mixed trend with recent volatility and a bearish short-term momentum.
- Current Position: The price is in a downtrend, testing the 200-period EMA for support. The bearish momentum is confirmed by the MACD and the price’s position below all key EMAs and the middle Keltner Channel line.
- Trend: The overall trend is bearish, with the price below the 10-period, 20-period, and 50-period EMAs. The 200-period EMA is a critical level that could determine the next significant move.
- Support/Resistance Support at 59,613 (200-period EMA), with resistance at 61,046 (10-period EMA) and 60,940 (middle Keltner Channel line).
- Momentum: The MACD indicates strong bearish momentum, with potential for further downside if the price breaks below the 200-period EMA.
Bitcoin is in a consolidation phase and its market structure suggests that it’s at a critical juncture.
The long-term uptrend is being challenged by short-term bearish pressure.
Be cautious, as the current structure suggests a potential for a significant move in either direction once the consolidation phase resolves.
The recent price action of bitcoin shows a struggle between buyers and sellers, with a short-term bearish bias evident in the most recent movements.
The tight grouping of EMAs and position within the Keltner Channel suggests the market appears to be in a state of indecision, with significant resistance around the 60,000-61,000 level and support around 57,800-58,000.
The failure to break higher and the recent drop below the 20-day EMA suggest that bears might have a slight upper hand in the very short term, but the overall picture remains mixed.
👀 You should watch the 200-period EMA closely.
The interaction of price with its 200-day EMA and the resolution of the current range will likely determine the next major trend direction.
A break below this level could signal further downside towards the lower Keltner Channel band, while a reversal at this level could provide a buying opportunity.
This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.
