Bitcoin price was washed over two waterfalls today and looks set to drop onto a support shelf at $400. With the price chart looking more bearish than it has for weeks, that may not be the end of decline.
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Bitcoin Price AnalysisTime of analysis: 14h00 UTC
OKCoin BTC/USD Spot 1-Hour Chart
From the analysis pages of xbt.social, earlier today:
The OKCoin BTC/USD Spot exchange spent most of the week with a permanent stream of large buy orders being inserted just below price. Its 1hr chart is featured above.
Earlier today, price declined to the 200-period moving average (red) in the majority of exchange charts, where it paused. However, once price broke below this bellwether (hell-weather for some) moving average, and then the lower channel trendline (grey), the bearish technical indications were undeniable. Our patience has been rewarded with a safe entry, at the expense of getting into position early.
This approach echoes the advice of veteran traders, who remind us that it is more important to execute a methodical and effective trade than to try and squeeze maximum profit from the move.
Potential targets at $400 and $385 are derived using the Fibonacci extension tool calibrated to bitcoin and gold's favorite .618 ratio.
One technical hurdle to the quick achievement of the initial 1.618 extension target is the reverse divergence annotated in blue on the RSI indicator (top-most indicator panel). RSI will soon exceed a previous low that is not confirmed by price, and this should cause a price reaction that will hold trade above the $400 psych level. For how long is not certain.
SummaryThe orchestrated pumping in the OKCoin BTC/USD chart, and others, had been disconcerting. Unfortunately, the pumpers lacked experience, chose the wrong price wave, and were massaging price into an upward correction – a classic bull trap. The buying was doomed to eventually run out of ammunition in the face of negative social mood pulling price down.
The longer-term strategy of such pumping must be that a block-reward halving rally, or some other speculative rally will eventually ignite, and that buying too early is better than buying too late. While this approach is understandable for non-leveraged buying, it does not make sense for leveraged trade where forced liquidation is a real risk should the market reverse and return to support lower in the chart.
Good luck to all traders shorting the bearish chart. Buy-and-hold speculators should remain patient and wait for the buy signals to start stacking up.
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Bitfinex Depth Chart and Buy/Sell Volume
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Disclaimer
The writer trades Bitcoin. Trade and Investment is risky. CCN.LA accepts no liability for losses incurred as a result of anything written in this Bitcoin price analysis report.
Bitcoin price charts from TradingView.Image from Shutterstock.