Analysis
Bitcoin’s sudden hemorrhaging may have stopped for now; expect possible bearish moves to $6,500 and below
Posted:
Bitcoin’s whopping collapse from $10,000 to $7,700 was a sight to witness, and witness a lot of people did. This collapse caused liquidations worth approximately over $700 million. A lot of people, at least those who are a little informed about technical analysis or those active on Twitter, knew that there was a big move incoming. And yet, it still caused massive liquidations.
Bitcoin’s Weekly Bearish Outlook
Source: TradingView
The worst might be out of the way for BTC and it might be time for yet another consolidation, at least momentarily.
- Taking a look at the weekly chart, BTC has formed a third consecutive weekly red candle. The most important one is the last candle which has breached far below the 21 weekly moving average, which is a wildly bearish sign for Bitcoin; a solid confirmation of this bearish bias is a subsequent close below this moving average.
- The weekly EMA ribbon is acting as a support for BTC and has prevented it from collapsing further.
- Interestingly enough, BTC has also found support on the weekly time frame, exactly on the 0.618-fib level, which also happens to coincide with the EMA ribbons.
Next Move
Although the weekly candle that is in play has three more days to close, it looks bearish for Bitcoin, even with a retracement. The RSI for BTC has dipped back to the 50-level, indicating a balance of buyers and sellers.
Source: TradingView
The MACD indicator on a weekly chart for BTC exhibited a bearish crossover, indicating a probable bearish downtrend for Bitcoin in the near future. A bearish crossover above the zero-line was last seen after the 2017 bull run. Hence, this could be a very important crossover to watch out for in the next few days for Bitcoin.
Verdict
Bitcoin hints at further bearish journey on a weekly time frame, which is confirmed by the MACD. BTC is currently finding support at $8,000 level, and a further drop in price could result in a retest of,
- the 0.5-fib level at $6,583
- the 0.382-fib level at $5,520
