Disclaimer: This article is not intended as an investment advice and published for educational purposes only. BTC markets are highly volatile and risky in nature. DYOR before making any investment decision rather than listening to a stranger over the Internet.
Our most recent analysis stated that BTC is looking to determine the future direction and highlighted potential areas to observe. BTC broke the $6,000 support level and currently switching hands at approximately $4,300. BTC decided to break below mainly because of the controversial Bitcoin Cash (BCH) Hard Fork resulting into the chain splitting into BCHABC and BCHSV; however, this is not the topic to discuss here. Let’s get to the BTC technical analysis.
I will cover multiple time frames in this analysis and identify potential bounce areas and resistance levels BTC is currently facing.
Monthly
BTC is finally entering the Capitulation Phase of its market cycle but we still need to see a higher selling volume bar. As BTC is in a downtrend and potentially close to finding a bottom, a high sell volume would indicate potential sellers’ exhaustion and the end of the downtrend. As seen in the chart, a high selling volume concluded the bear market in Jan 2015 after which BTC started its uptrend until Dec 2017.
The following monthly chart is using Fibs to speculate the potential bottom. In 2014 bear market, BTC hit the ATH of $1,153 and started the downtrend. The bottom was found between 78.6% and 88.6% Fib levels. If fractals play the same way in 2018-19 as in 2015, the 2018 bear market could find a potential bottom between 78.6% and 88.6% around $3,000 level.
This monthly chart shows that potential bounce areas are $3,000 followed by $1,175 and then $800. Although I do not see BTC going below$3,000 area (at least at this stage), I have highlighted all the potential order blocks on monthly TF.
Weekly
The weekly chart is the most important TF to watch. I have highlighted the vital support and resistance levels which can produce a bounce and provide considerable resistance respectively.
In the most recent downtrend, BTC hit 78.6% Fib Level and paused. This Fib level is not likely to hold for long and I am speculating a break down within a few days. Below this level, the $3,500-3,000 order block could produce a powerful, a overdue bounce. The intensity of the bounce and the follow up will indicate if it is a likely bottom for BTC or not. BTC can wick below $3,000 too and the size of the wick will indicate the presence of aggressive buyers in that area. On the upside, $5,600 is an interim resistance level followed by a strong resistance level at $6,100 and $6,800.
Daily
The daily TF is providing a micro view of the 78.6% Fib levels. When BTC hit that level for the first time on 20 Nov 2018, it bounced and closed above. However, it failed to sustain it and closed below on 22 Nov 2018. BTC is showing weakness to go above for the past two days in a row which is the reason I concluded that 78.6% level is not going to hold BTC at this point.
On the contrary, if BTC manages to close above by the end of this week, the daily and weekly will close above the 78.6% and BTC could begina temporary uptrend. In this case, the red highlighted area ($5,500- 5,800) is the maximum possible retracement BTC can achieve.
4-Hour
If you wish to observe BTC price action on a further lower scale, observe the order blocks I have lined up ($4300- $4400 interim resistance level) and how BTC being continuously being rejected from the upside and facing strong selling pressure.These levels represent a classic support turned resistance level.
Final Words
BTC currently is in a secondary bear market and could slide further. The $3,000 area is a vital level to watch and could produce a powerful bounce. The entire state of cryptos remains uncertain; however, BTC is not dead. These retracements and downtrends are not new for BTC. The bottom could be established in the coming few months. Cryptoriate will keep you posted.
Happy Trading!
