Bitcoin has seen a small 0.5% price decline over the past 24 hours of trading. The cryptocurrency is currently exchanging hands on exchanges at a price of $6435 after seeing a 10% price decrease over the past 7 trading days.
The Bitcoin market looked like it may be recovering in August, however after meeting resistance at the upper boundary of the long term descending wedge pattern we have been following, the market rolled over and reversed once again.
Since the high of $408 million in May the entire total market cap for all cryptocurrencies has fallen by a dramatic $204 million to where it is trading today around $204 million as seen in the chart below.
Bitcoin still currently holds its number one position in terms of overall market cap across the entire industry. It currently has a market cap value of over $111 billion after the 64 month old coin suffered a 12.30% price decrease over the past 90 trading days.
Let us continue to remind ourselves of the long term descending triangle wedge and then analyse price action much closer to highlight any potential support and resistance areas.
BTC/USD – LONG TERM – DAILY CHART
Analysing the market from the long term time horizon above, we can clearly see the descending wedge formation on the chart. The bottom of the wedge has been supported by the $6000 handle and we can see that each time the market had approached this area of demand, the market rebounded aggressively. The market has tested the bottom boundary of the technical pattern a total of 4 or 5 times over the course of the trading year.
Price action has also touched and reversed from the upper boundary of the technical pattern a total of 4 times also. Each time the market made an attempt to break above the upper boundary of the long term descending triangle we can see that resistance proved too overpowering as the market reversed.
Price action is currently trading marginally below the long term .786 Fibonacci Retracement priced at $6622 which has proven to be a significant area of resistance during the month of August 2018.
If the market continues to head further lower, we can expect the identified price level at the $6000 handle to provide significant support moving forward.
Let us continue to analyse price action much closer to highlight any potential support and resistance areas.
BTC/USD – SHORT TERM – DAILY CHART
Analysing the market from the benefit of a closer time period such as the one displayed above, we can see clearly how the market has recently reversed from the upper boundary of the descending wedge pattern.
Price action had experienced a significant bullish run throughout July 2018 as the market started from a price low of $5850 on the 29th of June 2018 and extended to an intermediary high priced at $8506 on the 2th of July 2018. This was a price increase totalling 47% from low to high.
We can see that after placing this high and meeting resistance at the upper boundary of the descending triangle, price action rolled over and began to drop aggressively. We can see that the market had found support at the short term .886 Fibonacci Retracement level (drawn in red) priced at $6129. We can see that as the market approached this area the bears began to take their foot off of the pedal and began to slow down. This gave the bulls a change to regather their control and push price action higher from this level.
We can see that toward the end of August 2018, price action went on to create higher highs nice again and continue to rally until it had met further resistance at the upper boundary of the technical triangle/wedge pattern. We can see that as the market met this area of resistance in rolled over aggressively once again and began to drop.
We can see that price action has now found support at the previous .786 Fibonacci Retracement level priced at $6398. If the bearish pressure continues within the market and pushes price action below $6398 we expect immediate support to be located at the downside 1.414 Fibonacci Extension level priced at $6343. Further support located below this level will then come in at the .886 Fibonacci Retracement level priced at $6129.
If the market can continue even further lower we expect significant support to then be located around the psychological round number $6000 handle. Further support located below $6000 can be expected at the long term lower boundary of our descending wedge/triangle priced around $5824.
The technical indicators within the market are currently heavily leaning towards favouring the bears at this current moment in time. The RSI has recently penetrated below the 50 handle indicating that the bears have regained control within the market. IF the RSI remains below the 50 handle we can expect the market to continue to head further lower. For some gains to made within the market we would need to see the RSI break above the 50 handle and continue higher.
Similarly, the moving averages have recently started to show favour that leans toward the bears as the shorter moving averages have crossed back below the longer moving averages indicating that the bearish pressure is now increasing. The 7 day EMA (blue moving average) has crossed below the 21 day EMA (purple moving average) which signals are bearish crossover. If these moving averages continue to diverge away from one another we can expect the bearish pressure to continue to increase within the market.