It was another red week for Bitcoin after closing the weekly at $3,193 USD. Where is price most likely to reverse and what might we see in the coming weeks?
The first thing to call out is that the weekly closed entirely beneath the former $3,600 support and therefore I expect this to become solid resistance if and when Bitcoin does bounce. Secondly, BTC is again finding support on the 200 week moving average, however there's no wick off it this week which leads me to believe it gets breached in the coming week, which is still okay as long as it simply wicks below. Lastly, the bull div on the Stoch RSI is still somewhat present but simply put if this week doesn't close in the green it will be invalidated and another red week would lead to a downside cross.
Bitcoin is also nearing the next major support region which sits between $2,500 and $3,000. Despite the bearish outlook I believe this region presents a realistic bottom for BTC and I will be looking to buy spot in this range. If this support structure doesn't hold then this opens up the lower supports of 2,300 at the 0.886 fib and the $1,800-1,900 support zone; however, I still deem these levels unlikely until price action proves otherwise and have little interest in shorting Bitcoin around it's current price.
I'm also closing watching for a cross to the upside on the weekly Stoch RSI - it looked like Bitcoin may get it this prior week but price quickly found new lows and invalidated that. Looking at Bitcoin's history whenever the weekly Stoch RSI crossed up while in the oversold region there was a significant bounce.
As highlighted above whenever the weekly Stoch RSI has crossed up from oversold throughout this downtrend there has been a bounce of 99%, 53% and 47%. If this outcome repeats itself Bitcoin could see a bounce to the $4,800-5,000 region in the coming weeks to months. Keep an eye out for that upside cross.
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