Bitcoin (BTC/USD) Price Update for February 12th, 2019

Market Commentary

The bitcoin markets have been underperforming recently relative to expectations given the technicals we've discussed over the past several days, and the past 24 hours is no exception considering price broke down below the descending triangle that we mentioned yesterday which is a sign that the bears are getting more confident as time lapses since the breakout late last week. That said, so far there has been practically no follow-through to the downside and the charts are actually looking decent in terms of buying the dip at some point, therefore we still want to stay directionally neutral with dry powder for a little while longer in order to try to take advantage of better r/r opportunities that present themselves at slightly lower levels. 

4-Hour Chart

We'll begin today's analysis with a look at the 4-hour chart where we can see that what was a descending triangle yesterday has morphed into what appears to be a bullish flag pattern on [members-only content] signals and mixed candle formations while short-term market structure remains bullish but medium to long-term structure is still bearish, so our forecast for more [members-only content] over the near-term seems apt moving forward. Also note that the 50 SMA is now above the slightly bullish 100 SMA, strong dynamic support continues to build around [members-only content] $, and the Ichimoku Cloud is positive out in front of the market, all good signs for the bulls, however the EMA's have rolled over and are now acting as resistance, the 200 SMA continues to fall, and new dynamic resistance has begun to build around [members-only content] $, all of which points to more downside over the near-term. Given this outlook combined with the support confluence in the [members-only content] consisting of the OTE long zone, upper demand/pivot area, the 50 and 100 SMA's, and the meat of the Cloud, we think this is an attractive area to try to catch a long play.

As far as short-term momentum and volume are concerned, Willy continues to recharge to the downside, RSI is also trending lower but is finding support at its 50-line, the Stochastic has been pinned in oversold territory for awhile now, MACD is treading water just below its zeroline, and PPO is flashing weak sell signals, all pointing to more [members-only content]. That said, bullish exchange volumes and a still strong and elevated A/D line are signs that the bulls will return in the not too distant future, again likely in the [members-only content] area where a large volume profile notch lines up with the confluence mentioned above.

3-Day Chart

Next up is the 3-day chart for a broad view of the medium-term setup where we can see that price is now stuck in between the still bearish EMA's on [members-only content] signals and small but rather bearish candle formations following a still intact [members-only content] signal from last week coming out of the [members-only content] zone, all confirming the likelihood of more near-term consolidation. The fact that said OTE long zone is still acting as support along with the inner demand area also points to more sideways action since all of the shorter-term moving averages continue to fall, strong dynamic resistance continues to actively build at [members-only content] $, and the Ichimoku Cloud remains firmly bearish above and out in front of the market, all of which will likely keep price below [members-only content] $ for the foreseeable future. Granted, the potential Adam & Eve bottom remains intact and actually looks quite good for the time being, although until we see a more legitimate confirmation of the current reversal pattern we'll stay in capital preservation mode. 

Moving on to momentum and volume, notice that Willy and RSI continue to tread water just above oversold territory but with a slight upward bias for now, the Stochastic is also sneaking higher following a full recharge to the downside, MACD is stagnant but appears more bullish than bearish, and PPO is still flashing weak buy signals, none of which is very helpful other than to tell us that [members-only content]. The lackluster state of the A/D line and the anemic exchange volumes don't help with directionality either so we'll continue to forecast generally consolidative conditions over at least the next few days with a possible retracement back down to the [members-only content] $ area before another attempt at higher prices by the bulls.

Market Summary

Not only are the charts indicating that we are close to finding a cycle bottom in terms of both time and price, but the fact that another attempt is being made to split the BTC community, this time via a small block controversy as opposed to big blocks, is another anecdotal sign that the bear market is close to coming to an end. It seems as though each time bitcoin reaches the trough of a cycle, some new seed of division is planted by the enemies of bitcoin only to be sown during the next bull phase. While we are certainly more ideologically aligned with this proposal than the last one, we are still opposed to any effort to splinter us further hence we think sticking with the 1MB block size is the right move over at least the next few years. Regardless, we're encouraged to see yet another sign of the bottoming process even if it means dealing with the inevitable political BS moving forward.