Bitcoin falls briefly below $3,300 before rising again

Posted Dec 11, 2018 by Ken Hanly
Bitcoin appears to be losing ground again as it has fallen below not just the $3,400 level but also even briefly dropping below the $3,300 level.
(FILES) In this file photo taken on December 18  2017 A woman uses her phone as she walks past an AT...
(FILES) In this file photo taken on December 18, 2017 A woman uses her phone as she walks past an ATM machine for digital currency Bitcoin in Hong Kong on December 18, 2017
Anthony WALLACE, AFP/File
CoinDesk analysis
Omkar Godbole has his usual daily analysis of Bitcoin (BTC) price movements on CoinDesk, last updated at 11:16 UTC December 11.
Godbole notes that a key long-term price indicator for BTC is showing oversold conditions for the first time in almost 4 years.
The widely used 14-week relative strength index (RSI) can move between 0 and 100. It currently is at 29.80 a level not seen since January back in 2015. An asset or cryptocoin is considered oversold if the RSI is below 30.00. A reading above 70 indicates an overbought situation.
The 29.80 reading is a sign that the recent heavy selling of BTC starting from highs above $6,200 may now be at the point of exhaustion. Bitcoin could thus very well defend the immediate support at $3,179 the 200-week moving average (MA) at least in the short run.
Many analysts believe that there can follow a strong corrective bounce when the RSI drops below 30 as with BTC now. However this is not by any means necessarily true as some strong bear markets can continue for some time even if the coin involved is overbought.
The present BTC bear market appears strong and resilient and continues to be backed by strong volumes. It would not be surprising if the downward trend continues for some time in spite of the oversold reading. As the Godbole article went to press BTC was trading at $3,390 on Bitstamp a drop of 2.3 percent on a 24-hour basis.
Chart analysis
The weekly chart shows the RSI had dropped below the key support level of 53 near the end of January indicating a change from bullish to bearish but as of now it is in oversold territory below the 30 level. The last drop of this sort in January of 2015 was quickly followed by renewed bids on the coin and hence the drop was short-lived.
As long as BTC continues to trade below the descending trendline as shown on the daily chart, the outlook for the immediate future appears bearish. Bitcoin failed to break through the diagonal resistance yesterday and this lends credence to the bearish set-up seen on the 3-day chart. Also, both the 5-day and 10-day MAs are declining another bearish sign.
Godbole's view
Based on his analysis, Godbole believes: "BTC could drop to the 200-week MA of $3,179 in the next day or two. That support, however, may hold ground, as the 14-week RSI is signaling oversold conditions for the first time since January 2015. A break below the 200-week MA would bolster the bearish setup seen in the 3-day chart and open the doors to $2,972 (September 2017 low). A high-volume move above the falling trendline (on the daily chart) would weaken the bearish pressure. A bullish reversal, however, would be confirmed only above $4,400 (Nov. 29 high)."
Present situation
24 hours ago BTC opened at $3,408 according to CoinDesk data. It hit a high of $3,428 but went as low as $3,294. It has not yet been able to drop below the $3,179 level indicating a further drop. However it is not moving up either but down. At 19:00 Central Standard Time BTC was trading at $3,332 down over $70 from the open or over 2 percent. The present price of Bitcoin can be found here.