Godpole’s analysis
On CoinDesk, Omkar Godpole has published his usual daily analysis of Bitcoin price movements. It was last updated at 12:29 UTC. Godpole notes that BTC had recovered 15 percent from the 14-month low it set yesterday. He claimed this may have opened the doors for a short-term price consolidation.
Yesterday, Bitcoin fell through the support of the trendline that connects the August 2015 and August 2016 lows and dropped as low as $3,474. The price is down a full 38 percent from highs of $6,380 a short two weeks ago. This is the lowest level since back on Sept. 17, 2017.
However, the drop did not last and prices closed yesterday UTC at $3,939 a price well above the trendline. This validated the oversold conditions shown by technical indicators. A period of consolidation could be next. As the article went to press, on Bitstamp BTC was trading at $3,920 after reaching a high of $4,069 earlier today.
Godpole notes that the recovery may turn out to be a “dead cat bounce” if the long-term trendline support, now at $3,830 is again breached. However, if BTC prices can find acceptance over $4,000 a stronger corrective rally could take place.
Chart analysis
In the 4-hour chart, the bullish divergence of the relative strength index (RSI) and the falling channel breakout are a sign of a bearish-to-bullish trend change. A stronger recovery rally toward $4,461 cannot be ruled out. Any gains above that level are unlikely as the 50-candle EMA below the 100-candle EMA which is itself below the 200-candle EMA shows the path of least resistance is to the downside.
The daily chart the low RSI has created a bullish divergence or a higher low. However, the primary trend will remain in favor of the bears as long as both the 5 and 10-day EMAs are declining.
The weekly chart shows that BTC is trapped between the resistance of the 200-week EMA now at $4,174 and the 3-year rising trendline support of $3,830. Price acceptance below that level would invalidate the signs of revival in both the 4-hour and daily charts.
Godpole’s outlook
Based on his analysis Godpole’s view is: “BTC’s defense of the long-term trendline support could be a sign the sellers have run out of steam. As a result, prices could consolidate around $4,000 for the next day or two. A break above the psychological hurdle of $4,000 would add credence to bullish setup on the 4-hour chart and open the doors to $4,500. On the downside, a move below $3,830 (trendline support) would allow a re-test of yesterday’s low of $3,474.”
Present situation
According to CoinDesk data BTC was at $3,986 24 hours ago. It has had a high so far of $4,064 and a low of $3,530. At 18:20 Central Standard TIme the price was $3,692 down almost $300 from its open or over 7.4 percent. The signs are that there could be a retest of yesterday’s low of $3,474 as Godpole’s analysis suggests. Godpole may be right that the recent Bitcoin rally was a “dead cat bounce”. Of course Bitcoin often has price changes that run contrary to technical signs. The situation can change rapidly at times. The present price of Bitcoin can be found here.
