Wednesday, 27 May 2020

Bitcoin trading sideways again at a bit above $3,500

After dropping below $3,500 briefly yesterday and today, Bitcoin appears to be recovering slightly as it trades above that level most of the day so far. It is trading mostly sideways in a narrow $62 dollar range up to now.

CoinDesk analysis

Omkar Godbole gives his usual daily analysis of the price movements of Bitcoin(BTC) on CoinDesk, last updated at $13.01 UTC.
The leading cryptocoin reached highs that were above $6,750 on Saturday after weakening the bearish case with a repeated defense of the psychological support level of $3,500 last week. Even so, BTC did not secure a UTC close above the 21-day moving average (MA) hurdle. The 21-day MA at present is at $3,732. Yesterday, BTC fell to as low as $3,470, a drop of 3.8 percent. As Godbole's article went to press BTC was trading at $3,527 on Bitstamp, a 4.3 percent drop over 24 hours.

The strong retreat from the 21-day MA shows that the "sell on rise" mentality appears to be still quite strong. The primary trend remains bearish, as indicated by the declining 10-week moving average. The probability of a sustained break below the $3,500 level remains elevated as long as the price of BTC stays below the $3,732 resistance level.

The daily chart shows that BTC failed at the 21-day moving average on Saturday, and ended up falling back to $3,500. This was reinforced by the declining 5 and 10-day exponential moving averages (EMA) and also the bearish 14-day relative strength (RSI) index at 42.00. Thus, the probability of a descent below the $3,500 level has increased. If this happens it would strengthen the bearish setup leading to a test of the Decembers lows near $3,100. On the other hand, this bearish scenario would be weakened should the price close above the $3,732 level UTC.
The weekly chart shows a long upper shadow representing the spread between high and close associated with last week's candle. This represents the "sell on rise" trader mentality. A quick rise was followed by a selloff that erased all the gains. Until BTC breaks through the downward sloping 10-week MA, the primary trend will remain bearish.

Godbbole's view

Based on his technical analysis, Godbole's outlook is: "BTC’s pullback from the 21-day MA may embolden the bears to push prices below $3,500. Acceptance below that level would expose the December low of $3,122. A convincing move above the 21-day MA of $3,732 would weaken the bearish case and open up upside towards $4,000. However, the primary trend is bearish, so forcing a move above the 21-day MA could be a tough task for the bulls."
Present situation
24 hours ago, BTC was trading at $3,539 according to CoinDesk data. The high has been just $3,558 and the low $3,496 a spread of just $62 dollars. At 20:05 Central Standard Time Bitcoin was trading at $3,541 just two dollars above its open. BItcoin appears to be consolidating as it trades sideways in a narrow range before making any significant move in either direction. If Godbole is right this is probably another drop. However, Bitcoin does not always follow the technical signs. The present price of Bitcoin can be found here.

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