Nov 18, 2019 --- Blog
Below is a recap we did on Bitcoin's performance throughout September 2019. It had its ups and downs and for more details - read below!
While the bitcoin markets continue to consolidate within the 7700 - 8700 $ range as expected, the odds of a bullish breakout like we discussed yesterday have diminished significantly over the past 24 hours given the recent price action and subsequent technical damage that has been done to the shorter-term charts. That said, we don't see much on said charts that is very helpful with directionality right now, and seeing as though we just began a new month we intend to zoom out to the monthly chart today to see where we stand in terms of the bull market that began in the Spring.
We'll begin today's longer-term technical analysis with a look at the daily chart where we can see that price continues to tread water in the middle of the still intact descending channel and around the top of the upper demand area on mixed but primarily red SCMR signals and still broken market structure while all of the shorter-term moving averages continue to fall, none of which is helpful for the bulls moving forward. The fact that price tested the 200 SMA yesterday and was quickly rejected back to the downside thus sparking a bearish gravestone Doji candle and new and very strong dynamic resistance dots overhead also does not bode well for the bulls to start the month which is why we are staying cautious and patient in case of another leg to the downside before this extended correction is over.
Moving on to medium-term momentum and volume, notice that Willy remains very close to joining the Stochastic in oversold territory but is not there quite yet, RSI has recharged and is still flashing a small divergence, as is the recovering MACD, and PPO continues to flash strong buy signals all of which should help the bulls play defense if the bears get active again (which is increasingly likely). The still healthy A/D line and dwindling exchange volumes should also help the bulls at bit too, although the suboptimal volume profile setup is a concern, especially if the 7714 $ local and regional low is taken out over the coming weeks.
As promised we'll zoom out to the monthly log chart today for a view of the long-term technical setup where we can see that the very long-term uptrend since inception remains intact and all of the moving averages continue to rise beneath the market which confirms our view that bitcoin is indeed in a new bullish cycle heading into the halving in the middle of next year. We can also see that there are some similarities between the consolidation during the early stages of the previous cycle and what we are experiencing now, although we will admit that there are more things to worry about this time around considering SCMR printed a bearish pivot bar and a CR cancellation on a bearish candle formation last month so the bias certainly appears to be the downside over the shorter-term. The lack of long-term historical or technical support until the 4000's $ is also not great news for the bulls, so we're hoping that the bull can defend the lower EMA around 7000 $ in order to avoid a test of said longer-term support.
As far as higher timeframe momentum and volume are concerned, Willy appears to be bottoming after a fairly nice recharge over the past several months and MACD is still above its zero line despite a slow decline recently, decent news for the bulls moving forward, although RSI and the Stochastic are treading water in no man's land and the Vix is nearing its lowest point in over two years which means the consolidation is not yet close to over but also that volatility is likely to increase into the end of the year. The mixed and dwindling exchange volumes confirm that more trendless action is likely over the coming weeks (and perhaps months) and the slightly weakening A/D line suggests that volatility will likely be to the downside before a resumption of the bull market so we want to stay very conservative with both setups and sizing until we see signs of a sustainable reversal on the longer-term charts.
While it might seem like there is quite a bit to worry about in terms of bitcoin price heading into year-end, and for shorter-term bulls there actually is, we think of this more like the last opportunity to get long at reasonable levels before the start of the halving pump hence we want to continue to try to hunt longs in favorable r/r areas in hopes of catching a sustainable bottom. Whether or not we are able to do that via a ProTrade is still yet to be determined, but even if not we think slowly accumulating in regular intervals over the coming months will be a good long-term play once the bull market resumes in earnest.
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