CoinDesk analysis
Omkar Godbole has his usual daily analysis of the price movements of Bitcoin (BTC) on CoinDesk. His article was last updated at 11:57 UTC. Godbole notes that BTC breached key support on Sunday and this may lead Bitcoin prices to retreat back towards $3,100. Yesterday BTC dropped to a 3.5 week low of $3,476 although it recovered slightly closing above $3,500 at $3,516. This invalidated the bullish view indicated by the higher low of $3,566 set on December 27. This move also adds more confirmation to the bearish reversal shown by the 9 percent price drop just last Thursday.
Signs show the bears are strengthening control of the market following the failure of the bulls to break through the resistance at $4,130 resulting in no stronger rally which some had been expecting last week. As Godbole’s article went to press, BTC was trading at $3,530 on Bitstamp a 2 percent drop over 24 hours.
Chart analysis
The daily charts shows BTC found acceptance below $3,566, the December 27 low, thus validating the bearish reversal shown on January 10.
The 14-day relative strength index (RSI) shows bearish conditions as it is at 42.00. It breached the ascending trendline last week. Also, the 5 and 10-day moving averages (MA) are declining, another bearish sign. The recovery rally from the December low of $3,122 may end up only setting the stage for a new sell-off.
The 3-day chart shows BTC’s fall back to $3,500 and this invalidates the bullish view shown by the three-day bullish outside-reversal candle the took place on December 20. The failure of the bulls to come through with a significant price rally in spite of the positive divergence of the RSI confirmed back on December 14 shows that bearish sentiment is still quite strong.
The weekly chart indicates that Bitcoin has made a bearish outside-reversal candle, signaling a continuation of the primary bearish trend shown by the declining 10-week moving average (MA)
Godbole’s view
Based on his technical analysis Godbole believes: “BTC could re-test the 200-week MA of $3,266 in the next few days and could extend the decline to the December low of $3,122. A weekly close (Sunday as per UTC) below the 200-week MA of $3,266 would open the doors for a deeper drop below $3,000. Acceptance above the downward sloping 10-week MA, currently at $3,919, would abort the bearish view.”
Present situation
24 hours ago BTC was trading at $3,516 according to CoinDesk data. The high since then has been $3,696 with the low just $3,506. The movement has been upwards to a considerable degree. At 19:20 Central Standard Time, Bitcoin was still at $3,667 about 4.28 percent up from its open or $151. BTC is nowhere near the $3,919 mark that would abort the bearish view as Godbole put it. However, there is no sign of a further drop yet either. The present price of Bitcoin can be found here.
