Updated scenario for Bitcoin. Key levels and the reversal likelihood
In this post, I applied: fundamental analysis, all-round market view, candlestick patterns, market balance level, graphic analysis, trend analysis, trading volume indicator
Today is Monday, and so, it is time to sum up the results according to fundamental and technical analysis and correct the forecast for Bitcoin’s near future.
The most important negative last week is likely to be the South Korean Bithumb exchange, with the theft of about 30 mln USD. The exchange representatives promised to pay off the missing capital from its own funds.
Moreover, the same day, the government announced its plans to tighten the regulation of South Korea's cryptocurrency exchanges and apply a regulatory framework to financial institutions with higher standard requirements for safety and reporting.
Another bit of news, dated 20.06, is that EOS blocked 27 compromised accounts, allegedly connected to fraudsters. This event can’t be interpreted in a single way. On the one hand, it is a precedent and a threat to the decentralization principles; on the other hand, it is a step towards a higher level of safety.
The news dated 22.06 that MtGox won’t sell its cryptocurrency assets until February, 2019, I think to be positive, as many were speculating this event and explained the dumps on the exchange by these sales.
If we compare the events with BTC chart, we’ll see that negative on 20.06 hardly affected the market. Bitcoin lost in price just 200 USD, and fully covered it the next day. This market response suggests that it is not going to fall deeper, being the further evidence that the ticker moves are highly manipulated.
As you see form the chart above, bearish correction was late; it started on 22.06 without any negative news.
If we study in more detail, we’ll see that the last pump was carried out in five steps. In the chart above, according to the surges in activity, it is clear that the cryptocurrency was dumped systematically.
After the target at 5800 had been reached, and there was its breakout, followed by the price moving down to 5755 USD, the manipulators understood that themarket didn’t support them and the panic wasn’t growing stronger. The greed became stronger than the fear. That made market makers exit sell trades and buy out the sold coins back; which finally resulted in a sharp price surge.
To find out, how the situation will develop next, I suggest we apply out all-round market view.
Let’s start with the monthly timeframe and see, what’s changed there.
The highlight here is February’s low breakout and reaching Keltner channel’s center at 5755 by the, price. This line indicates the market balance level and is the strong support level. As a rule, after the price touches this level, it is likely to rebound up to the channel’s top border, at 8825 USD.
Nevertheless, the event itself is rather indicative, as it shows the market bearish state.
If the price breaks through level 5755 USD inside the channel it will start falling down at the channel bottom border, towards 2687 USD.
However, we should take into account level 5400 that is the low of November 2017.
We can’t rule out the scenario of the market balance level false breakout, followed by the price rebound from 5400.
In general, the situation in the monthly timeframe is still bearish; but the correction up to 7000 USD-8000 USD is possible and fits into the bearish trend.
As I wrote in one my previous forecasts, we see the emerging of series of cycles, that features a constant narrowing of the ranges and taking longer time.
The possibility of the rebound within this cycle will ideally fit into the fractal model.
Oscillators don’t send any reversal signals yet, but there are already the grounds for the price rise. Both MACD and RSI stochastic are in the oversold zone; and BTCUSD ticker is outside the weekly borders of Keltner channel. It is also indirect evidence of a soon rebound, creating a strong resistance to the bears.
In the daily chart, there is a series of MACD bullish convergences and RSI stochastic convergence, which supports bulls.
The market sentiment depends on how Bitcoin closes today.
Yesterday, there emerged pin-bar, a price auction pattern, or a hammer, according to Japanese candlestick analysis.
This pattern will be confirmed if today’s high is higher than yesterday’s one, at around 6249.70.
A strong signal of bullish reversal will be if the daily bar closes higher than this level.
If you look at 4-hour timeframe, you’ll see the continuation of a three-component fractal model – momentum-slowdown-step.
As it is clear from the retrospective, the rebounds, like yesterday, have already occurred in the current bearish trend; so you should be self-deluded about a soon rebound and reversal upwards
A good signal will be if the ticker goes beyond the fractal model towards level 7000 USD. Only provided the price consolidates at the level, we can expect a possible reverse move in towards a new bullish trend, or at least, a bullish correction.
Bitcoin is still trading down in the bearish trend. Lows have been renewed, high remain unchanged.
A buy signal will be the price consolidation above 6300 and the breakdown of the local trend (marked with red dots).
The target for bulls for the next few weeks is 7040 USD.
The target for bears is 5400 USD.
Before the price consolidates above 6300, the bearish scenario is as likely as the bullish one.
Bulls are supported by the total depth and length of the trend without the price correction and strong support zones at the current levels.
I wish you good luck and good profits!
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Price chart of BTCUSD in real time mode
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