CoinDesk analysis
Omkar Godbole has his usual daily analysis of the price movements of Bitcoin on CoinDesk. It was posted at 13:47 UTC today. Godbole notes that Bitcoin (BTC) may break its three-year December winning streak unless prices cross the key resistance of $4,410 convincingly during the next few days.
In December 2015 BTC gained 14 percent. In 2016, it gained 30 per cent, and in 2017, 40 percent, according to CoinDesk’s Bitcoin Price Index. The odds appear to be stacked against a repeat for 2018 the fourth year.
BTC broke convincingly below the 21-month exponential moving average (EMA) last month, and this was a sign that the bear market drops from the record high of near $20,000 about a year ago were continuing. As long as the prices are trading below this level currently at $5,747 the bears are likely to remain in the driver’s seat.
Another negative sign is that the corrective bounce from recent lows below $3,500 ran out of steam at $4,410 last Thursday and this confirmed the bearish view provided by the break lower than the 21-month EMA.
Historical data show that Bitcoin also broke a similar three-year December pattern of winning, back in 2013.
Meanwhile, historical data shows BTC broke a similar three-year December winning streak in 2013. In December 2010, 2011, 2012 scored gains each December but then ended 2013 with a one-third drop. As the bears are in control after the disastrous November sell off this pattern could repeat itself. If prices of BTC were to extend beyond the November 29 high of $4,410 this would increase the chances of BTC extending the winning streak for the fourth year.
As Godpole’s article was posted BTC was trading at $3,980 on Bitstamp a 1.1 percent drop from its monthly opening of $4,024.
Chart analysis
The daily chart shows the bullish divergence of the 14-day relative strength index (RSI) confirmed last Wednesday failed to produce any significant rally indicating that bearish tendencies are still quite strong. Added to this, on Thursday BTC manifested a doji candle a signal of indecision in the market in spite of the bullish divergence. The price below $4,000 on Friday a sign of the end of the short corrective bounce. Bitcoin has carved out a lower high pattern at $4,400 a bearish pattern.
A further bearish sign is that both the 5-day and 10-day exponential moving averages (EMA) are descending another indication of a bearish pattern. BTC appears set to test the recent low of $3,474. Only a convincing move above $4,400 would rekindle the bullish view for a sustained rally above the resistance level of $5,000
The weekly chart exhibiting the descending triangle breakdown and the declining 5 and 10-week EMAs show that the path of least resistance is again downward. As the 14-week relative strength index (RSI) is staying well above 30 or the undersold territory there is room for a further drop toward $3,000.
Godbole’s outlook
Based on his technical analysis, Godpole’s view is: “The probability of BTC extending the December winning streak this year is quite low. BTC’s lower high at $4,400 marked the end of the corrective bounce. Therefore, a re-test of the recent low of $3,474 cannot be ruled out. BTC will likely score gains in December for the fourth year straight if newly established resistance at $4,400 is convincingly scaled in the next few days.”
Present situation
24 hours ago BTC opened at $4,136 but over time dropped to a low of $3.755. At 15:25 Central Standard Time, it was at $3,819 on CoinDesk. This represents a drop of almost 8 percent since the opening or close to a $320 drop. The high was only $4,169 not very near the resistance level of $4,400. BTC has not tested the low of $3,474. Perhaps there will be a period of consolidation before another large drop but Bitcoin often fails to follow technical indicators. The present price of Bitcoin can be found here.
