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Bitcoin Sinking As Lower Volume Signals Downward Trend

Published 12/09/2014, 07:00 AM
Updated 07/09/2023, 06:31 AM

Bitcoin (BTC-eUSD) prices have dived slightly, pushing towards the first weekly support level at $364.63. The price however, has rebounded from this support level, currently at $369.61, down $9.02 or 2.39%. The price action is now heading towards the weekly pivot point at $373.54. Trading volume dropped sharply over the past week, which could signal further downward moves going forward. A 42% decline in trading volume was recorded compared to the previous week across all exchanges.

Last week, a representative from the Parliament Treasury Select Committee told the House of Commons in the U.K. that Bitcoin does not require further rules and could function well with existing laws. Any attempt to regulate crypto-currencies could stifle innovation. Across the Atlantic, regulation has been discouraged by Steve Stockman, a member of the US House of Representatives . Additionally, the USMS auction failed to meaningfully impact the price of Bitcoin. An additional side note: notable Bitcoin investor Tim Draper won part of the auction, acquiring 2,000 Bitcoin.

The 4-hour chart, below, with the Ichimoku cloud, suggests bears are in control of the market at the moment. However, note that the cloud is very thin, suggesting weaker resistance. The lagging line has moved below the cloud in the previous periods, confirming the downward trend. Bullish momentum is expected if the price closes above the base line, which is currently at $370.94. The price looks set to repeat a test of the weekly support found at $369.61, and a close below this level should be followed by a continuation of the downward trend.

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BTC/USD 4-Hour Chart

The chart below shows the daily time frame for the BitStamp exchange. The price action has moved through the cloud at the thin section and looks set to close below the cloud, i.e. below the red span. Declining volumes additionally suggest that the downward trend may continue. A close below the cloud would act as the first signal of a possible downward trend. Furthermore, its relative strength index at the daily time frame has dipped below 50. If it remains that way, this will signal the start of a downward trend.


Latest comments

Thanks for the analysis. I wonder why people keep analyzing BTC-e though instead of say Bitfinex, which is where the volume is. I don't think BTC-e ever leads any trends...
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