Bitcoin loses $7k, bulls nowhere in sight
Last time around I said that if Bitcoin closed more than two days below the 50 DMA or lost the $8,200-8,300 range that it would revisit at least $7,400-7,600; a week later and BTC just closed sub-$7,000 and there hasn't been a bounce in sight. What now?
Bitcoin Weekly Chart
The prior week closing below the weekly mid-range was the first sign of trouble for Bitcoin and it followed up by dumping straight through the only support structure that remained from $7,300-7,600 and has officially set a lower low. There's no denying it, weekly market structure is bearish and it seems the massive candle we saw a few weeks ago was driven purely by China speculation and had no impact on overall market direction. The weekly chart tells me we're heading for $5,850 and I wouldn't put low $5,000's out of the picture either. I don't like to try to predict bottoms but if I had to guess, I think it will take out the range lows at $5,850 and find support from the 200 weekly MA again, somewhere in the $5,300-5,600 range depending how long it takes to get down there.
Shorter term, I think a bounce is due soon (though I've said that for a while now) but any rejection in the $7,300-7,800 range would be a clear short opportunity. That being said, I am a long-term spot buyer below $7,000 and will continue to dollar-cost-average on a weekly basis.
Support: Some support in around $6,400 but main support lies $5,850-6,100
Resistance: $7,600-7,800 should be a major obstacle now
Only want to call out one thing on the daily chart and that is Bitcoin is losing this major $7,000 support level and is on the verge of losing the trendline support from the last market bottom. There's not a ton of support here on the daily and I expect price to head down to $6,400's in short order.
The Gold Fractal Revisited
The pump fueled by Chinese speculation definitely threw this fractal off, but if you can erase that from your memory there is still a chance this pattern holds up. Price forms a descending triangle and experiences a significant breakdown, bounces within the vicinity of a major support cluster four times, each slightly lower than the last, before giving out on the 5th touch. Price then makes a set of bearish re-tests and finds a final bottom right at the level where Gold made it's last major impulse down before the relentless move up. However, a lot of buyers were watching the major support cluster and key level at $1,000 and price never quite made it there. So what if this scenario plays out with Bitcoin?
It doesn't line up perfectly and I'm certainly not building a trading plan around it but it merits watching in my opinion. Just like most bottom callers were looking for $3,000 last time around, only for price to miss it by a few hundred dollars, we could see the bottom put in slightly higher than expected.
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