Recently, we saw a in bitcoin gold price from the $420 resistance against the US Dollar. The price traded below the $400 and $300 support levels. The downside move was strong as the price declined below the $280 support as well. A low was formed at $193 from where the price started correcting higher. It has moved above the 23.6% Fib retracement level of the last decline from the $420 high to $193 low.
However, the price is struggling to gain momentum above the $280 and $300 levels. At the moment, it seems like there is a key contracting triangle forming with resistance at $280 on the hourly chart of BTG/USD. The pair might continue to consolidate above the $240 support area before making the . The triangle resistance is around the 38.2% Fib retracement level of the last decline from the $420 high to $193 low. Therefore, a close above the $280 level and the 100 hourly SMA is needed for buyers to gain traction.
On the downside, the $240 support area holds a lot of importance and it must hold to prevent further declines in the near term.
Looking at the technical indicators:
Hourly MACD – The MACD for BTG/USD is slightly placed in the bullish zone.
Hourly RSI (Relative Strength Index) – The RSI for BTG/USD is currently just above the 50 level.
When it rains, it pours. Last week, that China was taking harsh measures to reign in their various cryptocurrency exchanges. Several exchanges closed down and others were given a deadline to properly cease trading operations. This news came hard on the heels of recent directives that banned ICOs in China, leading to across the board.
After this latest news settled, bitcoin managed to slightly rally before topping out around $4100. However, early this week, rumors began to circulate that executives associated with Chinese exchanges are being prohibited from leaving China. At the time of this article, BTC-USD is sitting just at $3900 and is showing signs of further pullback:
The figure above shows the whole, macro bull run from the $1700s. One important feature of the trend shown above is the 61% retracement down to the $2900s. The retracement down to such a low value shows that sell pressure is very strong in the current market and hints toward bullish exhaustion within the macro trend. Another key feature to note is the following:
An important test of this rally was the 100% retracement of the bear run, post-China news. Sitting just below the 23% Fibonacci Retracement lies the bear run. The test of the 100% retracement is important because that resistance line marks a strong shift in market sentiment. A failure to break through those values shows that, even though there was a strong rally, the market is still bearish in nature and is likely to continue.
Figure 2 also shows several tests and rejections of the 2-Hour 200 EMA (Exponential Moving Average). The 200 EMA is a common tool used among traders to objectively view the state of the market compared to the prior trends. A trend existing below the 200 EMA is bearish in nature, and trends that show support on top of the 200 EMA are bullish in nature.
At the time of this article, the BTC-USD is displaying two failed tests of key resistance levels and its showing little sign of upward pressure. Currently, the trend is sandwiched between the 200 EMA and the 50 EMA. Both moving averages can used in conjunction to gauge just how strong the market is. Like the 200 EMA, the 50 EMA shows short-term bullish and bearish trends relative to the EMA line: Trends above are showing bullish traits, and trends below are showing bearish traits.
Right now, we are in the middle of a crucial test of both support and resistance lines as the market decides where it will go next. A break below the 50 EMA will ultimate show the long-term bearish intent of the market and will lead to tests of the low support values:
Figure 3: BTC-USD, 1-Hour Candles, GDAX, Support Levels for Current Rally
At the moment, BTC-USD is making its third test of the current rally’s 23% retracement values. A break below this line will have bitcoin testing the macro 38% retracement values in the $3700s. If bitcoin manages to break the 38% retracement values somehow, there will be strong support around the $3400s as the 50% macro Fibonacci Retracement values (shown in Figure 1) have historic significance and support.
If bitcoin is going to see any significant price growth within this rally, it will have to pick up some major buy volume and break through very strong, historic resistance values. It’s extremely unlikely that, given its repeated failures to break resistance and the inherent bearish news looming over the bitcoin community, BTC-USD will shove to new highs without strongly testing lower macro support.
Summary:
BTC-USD had a strong rally, but ultimately topped out around $4100.
At the moment, BTC-USD is testing macro support levels and shows very little, significant upward strength.
Should we break support in the $3900s, we can expect a test of the macro 38% Fibonacci Retracement values in the $3700s.
Trading and investing in digital assets like bitcoin, bitcoin cash and ether is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on bitcoin Magazine and BTC Media related sites do not necessarily reflect the opinion of BTC Media and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.
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Figure 1: BTC-USD, 12-Hour Candles, GDAX, Macro Fibonacci Retracement Values
Figure 2: BTC-USD, 2-Hour Candles, GDAX, Failed 100% Retracement
Figure 3: BTC-USD, 1-Hour Candles, GDAX, Support Levels for Current Rally
