CoinDesk”s analysis
CoinDesk’s analysis which came out earlier this morning noted that there was a low volume indicating what it calls a “bull trap”.
The price had broken through a key trendline through the May 6 high to the May 21 high back last Sunday which together with last Tuesday’s outside-day-candle signaled a short-term change to a bullish trend. However, trading volumes have been falling. Rolling 24-hour trading volume is at $4.95 billion down fully 22.5 percent from the current quarterly average of $6.38 billion.
The low volume should be of concern as it is a sign that a rally has peaked and will be short-lived. As the analysis was posted at 10:00 UTC bitcoin was trading at $7,591 on Bitnex, down about two percent from the previous day’s close of $7,718. A slight pull back should come as no surprise.
CoinDesk says that the decline in trading volume negates the bullish signs previously noted and puts into question whether the rally from the May 29 low of $7,040 through the Sunday night high of $7,779. However, the 4-hour chart shows volumes are picking up as the price fell back to $7,549 from a high of $7,764. This may indicate the possibility of a fall back to last week’s low of $7,040.
CoinDesk’s outlook
On the basis of its analysis CoinDesk predicts the following: “The upside break of the falling trendline has opened the doors for a rise to $8,000. However, low volumes may indicate a false breakout. A downside break of the rising wedge seen in the 4-hour chart would allow a drop to $7,040. Only a high-volume break above $7,700 could yield a sustainable rally to $8,000.”
Present situation
June 4th was definitely a down day for bitcoin. The price opened at $7,711. 36 but ended up closing at $7,490.49 well over two hundred dollars below its open. The high was only $7,754 although above the $7,700 level that could lead to a challenge of the $8,000 level but perhaps the volumes then were still low. However, the low was just $7,456 far from the $7,040 level mentioned by the CoinDesk analysis.
It is now one hour into June 5 UTC. The bitcoin price is marginally up since the open of $7,490, at $7,493. We will have to wait and see whether the down trend continues or if the price may begin to recover again and penetrate the $8,000 level. For now, it appears stuck in the mid-range between $7,000 and $8,000. The present price of bitcoin can be found here.
