Wall Street ends lower on hawkish Warsh at Jackson Hole, but rises for the week
With the total market cap of all the cryptocurrencies declining by more than 80 percent, the top ten coins weren’t spared. In fact, Bitcoin lost even more than that, with an incredible decline of more than 84 percent. However, the more Bitcoin decreases in its value, the more volatility is expected. While there are still many bearish arguments which indicate that Bitcoin’s bottom is beneath the $3000 mark, there are also bullish arguments to highlight at the moment. In this technical analysis, I want to introduce the potential catalysts that might cause a new uptrend of Bitcoin.
BTC/USD Monthly Chart
When Bitcoin found its bottom back in 2015, the RSI was located at the exact same spot as it is located at now, at 44 points. In addition, the previous bear trend lasted for 420 days, while the current one already went on for 384 days. Is this an indicator that the bottom is not too far away?
Furthermore, Bitcoin recently broke through the 50 EMA in the monthly chart, which is one of the bearish arguments. However, if Bitcoin breaks the 50 EMA again we can view the bearish break of the EMA as invalid. If this happens, the EMA will act as strong support again.
Interestingly enough, taking Heikin Ashi candles, we can see that the 50-month EMA successfully held as a support so far, which indicates that this price region is a very strong support level. This means the 50-month EMA could potentially form the bottom of Bitcoin, even though it might only be a short-term bottom.
BTC/USD Weekly Chart
In fact, an extremely bullish argument for Bitcoin right now is the bullish divergence found in the histogram of the MACD indicator. Bitcoin more than halved since the low shown in the histogram, but the histogram is now ticking way higher than previously. This could soon lead to an uptrend.
BTC/USD Daily Chart
After a sharp increase from $3123 to $4237, Bitcoin took a correction down to the 0.618 fib level, where it bounced off and continued its uptrend. This is indeed a very bullish sign since a bounce off the golden pocket zone indicates further upward movement. If we fall below this level, we can assume a continuation of the bear trend.
While the bullish crossover recently established in the MACD is still valid, Bitcoin is currently in a symmetrical triangle which soon could break out to either the one or the other side. It recently bounced off the triangle trendline and, if it breaks to the upside, Bitcoin faces resistance at $4200, where the 50 EMA acts as additional resistance.
Bitcoin formed a bullish inverse head and shoulders pattern. If it manages to break the neckline at the 50-daily EMA resistance, the target of the iH&S-pattern is at least $4609, which is a ten percent rise in price.
To conclude, Bitcoin still has a chance for a new uptrend, although the chances are relatively moderate. The bearish arguments are still valid, which make a continuation of the downtrend possible. Due to the fact that Bitcoin broke its monthly trendline which started in 2012 while it also broke out of the bearish descending triangle pattern, it’s not safe to say that the downtrend has come to an end. Nevertheless, it’s pretty safe to say that 2019 will be a very volatile year and the bottom shouldn’t be too far away. With positive fundamentals all the way, the only thing Bitcoin needs to continue its long-term uptrend is time.
