Since hitting around $9800 on May 4th, bitcoin has tumbled down to around $7,000, and is now trading in the mid $7500’s.
Bitcoin price has carved a defined arch over the past two months as measured on a four hour chart.
Most striking, the 50 period exponential moving average (EMA) served as a line of support as bitcoin progressed up the front of the arch through the 4th of May. Resistance formed around the $9800 level in the first week of May. Bitcoin then crossed under the 50 period EMA on the 5th of May.
Since that time, we have seen bitcoin descend down the backside of an arch pattern and the 50 period EMA has served as a line of resistance.
There were notable tests of that line that came in 5 and 10 day increments.
A level around $9300 was tested on the 10th. A level of $8800 was tested on the 15th, and a level of $8500 was tested on the 20th. Ten days later, the line served as resistance again around $7600.
chart and analysis built by Jason Pfaff in TradingView
Today and through the weekend it is reasonable to assume a holding pattern as part of a larger consolidation move in the mid $7500’s. We could expect sideways price action in a relatively low volatility environment if current patterns extend.
In order to fully exit the current arching pattern, we would expect to see a pick up in volatility which could fuel increased price action, and ultimately some long needed momentum for bitcoin bulls.
Absent that long overdue spike in volatility, it could be another sleepy week for bitcoin traders as the technicals nor fundamentals support any constructive moves back up in price.
data courtesy of buybitcoinworldwide.com
We expect a range next week of $7200 - $7800 for bitcoin, with well established support and resistance at either end.
While it can be confounding to understand what has happened to bitcoin, it is easy to observe. The trends proclaim increasingly lower highs, while grinding to incrementally lower lows.
Shockingly to those that have followed the digital currency for any length of time, the lack of volatility has become at the same time stunning for jts relative lack of movement, and tediously boring because of it.
This week, like most in recent memory, could be hard on bitcoin bulls. Resilience is never easy to come by as a trader. Slogging through a weekly morass of low volatility, regulatory scrutiny, competition spontaneously sprouting from all corners, and seemingly overwhelming confusion about the most basic elements of the potential future for the cryptocurrency are eroding the spririt of bitcoin and decaying core demand.
In 2018 so far, it isn’t what it was. It’s less than many thought, and that disappointment could slowly reverberate throughout crypto markets for the rest of 2018. This is a market that is increasingly bearish by the day.