BTC price at press time: US$221.77
Bitcoin has been in a giant trading range all year. As the chart below shows, it’s been range bound between ~US$220 and ~US$300. A dip below this range could very likely lead to a test of the January lows. It’s time to see where the real bottom in price is and the US$220 area is the big battleground.
The picture has turned bearish again and in very ugly fashion. The 50 day EMA is about to make a bearish crossover of the 100 day EMA. This is very close to occurring and if it does (which is extremely likely), it will be hard for major support at US$220 to hold.
The RSI and Money Flow Index are both bearish and at oversold levels any bounce in these should be temporary as they are both on sell signals and are confirming the downward trend in price.
On Balance Volume (OBV) has never confirmed the move up and sustained volume on these up-moves has not happened, which has been a cause for worry for months. OBV tried to break above resistance multiple times and failed. OBV has begun falling again causing negative volume pressure and this could foreshadow lower prices. The main tenet behind OBV is that volume precedes price.
The one-year Ichimoku (cloud chart) paints a bearish picture. The price is way below the cloud and falling. The cloud ahead has made a bearish crossover as well. The price has crossed below the Tanken Sen and Kijun Sen, both of which are now below the cloud and falling, indicating that momentum is now to the downside. Also, the Kijun Sen has crossed below Tenken Sen and this is bearish.
The Chikou San (Lagging Line) has also fallen below the cloud adding to the array of bearish signals on the Ichimoku chart.
For further definitions of what is being discussed, please refer to this previous post on Ichimoku cloud charts.
Fibonacci retracements have been drawn from two price tops: the mid-March high of ~US$297 and the July 12 high of ~US$310.
Price has broken below some big levels that needed to hold and as has been mentioned before the US$220 level is major support and needs to hold. It has held in this ~US$215-US$220 level all year and as mentioned above if it doesn’t hold this time expect some big downside tests.
The MACD is bearish and remains on a sell signal.
Included is the Directional Movement Index (DMI), which looks at buying and selling pressure. The blue line indicates buying pressure, the red line indicates selling pressure, and the orange line is the ADX, which indicates the strength or weakness of a trend.
Selling pressure is at an elevated level and above the ADX line. The selling pressure continues to increase and will probably continue if US$220 breaks. The sellers appear to be in control here.
The Bollinger Bands are downward sloping and have widened dramatically. Volatility is back and it’s been all to the downside. The widening of the bands indicates there is more room to run here on the downside as price is still within the bands.
The short term indicators are all bearish. This should not be a surprise at all. The RSI, MACD and MFI are all bearish and near oversold but do not look likely to bounce. Support levels below include ~US$211 and ~US$197-$200. Short term support of ~US$223 has been broken.
Testing and holding US$220 is crucial to the near term price action in bitcoin. If this level doesn’t hold, expect many traders to exit positions and others to enter new short positions. Right now, price is teetering on major support and about to fall through the bottom of the year long range.