CoinDesk analysis
A recent CoinDesk analysis of the price movements of bitcoin(BTC) notes that bearish sentiment in the futures market hit a record low last week. This is a sign that the recent dip in BTC prices may be finished.
Non-commercial futures contracts of BTC, traded by large speculators and hedge funds were the lowest on record according to the Commodity Futures Trading Commission (CFTC) as of Friday. The data indicates the speculators are the least bearish on BTC that they have been since the futures were first listed back in December. There were -1266 net short positions, or bearish bets. A positive number would indicate net long positions or bullish bets. Ten weeks ago the net short positions were -1945. This indicates there has been a sharp decline in short positions indicating there are many less betting on a further price decline. The fact that BTC’s price has for the most part been able to remain above $6,000 is also a bullish signal. When the article was posted at 11:00 UTC bitcoin was trading at $6,715 on Bitfinex.
CoinDesk chart analysis
The weekly chart shows that BTC dropped below the $6,000 level three times in the last ten weeks. However, each time the drop did not last. All three weekly candles closed above the $6,000 significant psychological mark. This shows that the path of least resistance for the price is to the upside. Short-term technical charts point in a similar direction.
On the daily chart the 5-day and 10-day moving averages (MAs) are sloping upward, a short term bullish pattern. Added to this the 50-day MA is about to cross the 100-day MA another bullish sign.
On the 4-hour chart both the ascending trendline and the rise in the 50-candle and 100-candle MAs favor a move higher towards the $7,000 level.
The inability of the price of bitcoin to go beyond the psychological $6,800 level over the weekend is a cause for some concern. Only a break below the channel support level that is at present at $6,600 would signal a bearish reversal of the bullish short-term trend.
The CoinDesk outlook
Based on its technical analysis the CoinDesk article predicts: “The bearish net positions in the bitcoin futures markets hit a record low last week, validating the argument put forward by the technical charts that the cryptocurrency has likely bottomed out around $6,000. A break above $6,800 (psychological resistance) would bolster the already bullish technical setup and would open the doors to $7,000. A move below the ascending trendline seen in the 4-hour chart would weaken the bullish case and could yield a drop to $6,230 (Aug. 20 low).”
The present situation
After a sharp rally just before it closed the price of BTC broke well past the $6,800 resistance level. At 23:17 UTC time on August 27 BTC was trading at just $6,741 but by 23:48 just before closing it was way up at $6,907. BTC also opened on August 28 at the same price. It went up a high as $6,934 approaching closer to the $7,000 level. But as this is posted at 02:11 it had fallen back to $6,894 slightly below the open. BTC could still have problems breaking through the $7,000 level but the pattern so far from late yesterday supports the bulls. The present price of bitcoin can be found here.
