Godbole’s analysis
Earlier today Omkar Godbole at CoinDesk provided an analysis of the price movement of bitcoin (BTC). The article was last updated at 11:13 UTC. As his article went to press BTC was trading at $10350 on Bitstamp up 6 percent on a 24 hour basis. It hit an eight-day high earlier in the day of $10,506. This was up 12.7 percent from its August 29 low of $9,320.
Over the last nine weeks BTC has been able to find buyers in the $9,000 to $10,000 range. However, charts show the recovery rallies have consistently reached only lower highs showing a bull market exhaustion.
The question now is whether the present rally can invalidate the bearish lower-highs setup by moving above $10,956. Godbole thinks that the gains of the last four days could be sustainable and could be extended further as BTS’ dominance rate, that is its share of the total cryptocurrency market is now over 70 percent the highest it has been since March of 2017.
Many observers think that price gains are sustainable if they are accompanied by an increase in the dominance rate. The increased dominance shows that money invested in BTC is staying in BTC and not being used as a stepping coin to invest in altcoins. However, trading volumes are weak indicating that the recovery could be short-lived.
Hourly and daily charts
During the last four days buying volumes on the hourly chart are less compared to selling volumes during BTC’s drop to a low on August 29. Buying volumes only went up slightly in the 60 minutes to 21:00 UTC yesterday. During that time BTC had a price jump from $10,200 to $10,470.
The price bounce of the last four days appears to lack substance, so that one could have a pullback possibly to $9,750 within the next day or so. If there is a UTC close above $10,956 together with high buying volumes the door would be open to a rise up to $12,000.
Weekly chart
Within the last ten weeks, the bulls have managed to fail four times in attempts to reach above $12,000. However, sellers have failed to keep the price below $9,500 for any extended period. However, Godbole considers a downside break to be most probable as key indicators are bearish including a bearish crossover of the 5 and 10-week moving averages (MA)
The moving average convergence divergence (MACD) histogram has also dipped below zero since the first time since February.
The MACD histogram is explained here.
The Chalkin money flow that incorporates both prices and trading volumes, also slipped to a 4.5 month low of 0.10 also a sign of weakening bullish pressure.
Present situation
According to CoinDesk data, 24 hours ago BTC opened at $10,362. It’s low since then is $10,290 but its high has been $10,752 considerably higher than when Godbole wrote his analysis. However, Godbole’s $10,956 bullish target has not yet been reached as I post this article. At 16:30 Central Daylight Time the price was still $10,687 not too far from its high. BTC is up over 3 percent over 24 hours or $325 dollars a significant gain but the outlook is still not bullish. The top twenty altcoins are showing a mixed picture with many up but also many down. The present price of bitcoin and the top twenty altcoins can be found here.
