Bitcoin Price Analysis 5–27–2018 (Special Look at the Weekly Indicators)

Picture Cred: The Wired; Disclaimer :This is not investment advice, I do not own any of the coin I am reviewing, nor have I ever and do not plan on doing so in the near future from the time of this article’s release. No one/entity/company/corporation paid me crypto/dollars/assets/favors or any other liquifiable asset/currency to write this article and I am neither profiting directly or indirectly from its curation. This article was not written under duress/pressure/threat/extortion or any other unfavorable condition either. I also do not possess any coins from a direct or indirect competitor of the coin I am reviewing and have no tied interest to the success/failure of this project. To reiterate, this is also not financial advice. I am not recommending any positions and any statements that happen to be made about such a position is nothing more than a reflection of opinion, not legal advice.

Let’s dig right into it.

I can promise you that I have not moved this downtrend line that you see the price hitting up against in the picture above. I drew it about a week or two ago.

It started from the last local top, which was at May 5th, 2018 (Cinco de Mayo!) and has continued on to this point.

This is on the 4H time frame.

Let’s take a look at the RSI on the daily now.

RSI(14)= pink line

EMA(9)[RSI(14)]=blue line

I’ve mentioned this before, but I’ll reiterate for anyone that doesn’t know.

I used the blue line to “smooth” the values of the RSI (14).

This also creates a buy/sell signal as well.

Pink line > Blue line = Buy signal

Blue line > Pink line = Sell signal

I have a guide on how to create this in TradingView for yourselves as well if you don’t know

Interpreting the RSI

So, normally for RSI, when the price crosses below the value of 50, that’s a sell signal.

When it crosses above that value of 50 that = buy signal.

We see that the RSI pretty much has plummeted from the overbought value that occurred on Cinco de Mayo.

Looks like there was a very sharp selloff following Cinco de Mayo.

I’m not entirely sure why, but it is worth noting that Cinco de Mayo is a huge celebration in Mexican culture (it’s Mexican Independence Day).

Source: https://bitcoinmagazine.com/articles/bitcoin-in-mexico-1399342161/

Now, let’s take a brief look at the Rate of Change for the RSI.

The above chart shows the Rate of Change for the RSI.

The rate of change is exactly as it sounds like in English. It’s literally tracking the rate of change.

The dotted line in the middle here represents the value of “0”. So the Rate of Change for RSI at this point in time (on the daily chart) is negative. This shouldn’t come as a surprise based on what we’ve seen.

I’ll leave it like this until we see any substantial spike in the RoC that’s worth mentioning.

Weekly Chart Analysis

For the next portion of this analysis I want to look at Bitcoin on the weekly chart and we’ll take a brief look at Bitcoin on the monthly chart as well.

What we have here is a very interesting situation.

If you remember, I mentioned in the past that the EMA-50 serves as support when the price is above it and serves as a resistance when the price is below it.

Also, whenever the price crosses above an EMA indicator, that’s generally a very bullish indicator. Whenever it crosses below, however, that’s very bearish.

Below, we can see how the price tested the EMA-50 as a support twice before and bounced.

So, in essence, this week and possibly next week will serve as the moment of truth (more than likely next week).

If that price breaks down south of the EMA-50, the drop might be a lot more precipitous than it is now.

There are, of course, intermediate support points and the EMA-100 is worth being considered. However, on a long-term basis, it would appear that the EMA-200 would be the best point to look to next in terms of a resting support for the price of Bitcoin.

What Bulls Should Be Concerned the Most About When it Comes to Bitcoin

Most of the indicators for Bitcoin on the weekly chart are still fairly bullish.

Sure, the readings are definitely progressively less bullish than they once were, they’re still very bullish, overall.

1. The EMA50 is still FAR above the EMA200.

2. The Ichimoku Cloud

3. CM Super Guppy

4. MACD

5. Volume Analysis

I’ve covered the volume analysis several times. However, here’s the major problem. The decline in the volume can’t occur forever.

Continuing On

I’ve mentioned this before, but the fact that the volume has been virtually nonexistent in recent weeks means that the majority of the price decline is due to the fact that folks simply aren’t buying Bitcoin more so than from folks just selling.

However, the position that Bitcoin is in, volume-wise, makes it hard to see any more decreases for much longer. We’re also nearing the end of this descending triangle pattern formation.

So, in my opinion, there are one of two things that can happen:

A) The volume spikes upward suddenly and that would probably be sell volume (panic selling more likely).

B) The volume remains ambivalent and at the same rate, but the price slowly declines.

However, as the price continues to decline and break that long-term support ($6–7k), the market starts to really panic and those that have been long-term “hodlers” for weeks/months/years start to lose some faith in their investment and feel as though the price will decline sooner than later.

In either case, I don’t see any type of scenario where there is a bullish reversal here. There may be a short-term increase in the price, but I do not believe that there is any shot that we bounce up from here and start shooting toward $20k and then breaking that point.

Warning

I mentioned this phenomenon before with Ethereum, but selloffs in crypto have not started with LONG, red candles.

However, the longer that a selloff goes on, the greater the volume of that selling begins to become as buyers slowly start to panic and believe that the price will not rise back up again.

This is a common pattern that has been observed repeatedly throughout cryptocurrency.

It’s worth noting, however, that the money that’s coming into the space is not coming into Bitcoin. I cover this on my market analysis. But, the money is actually come from and into coins that are not Bitcoin/Ethereum.

Fibonnaci Levels

Let’s look at the Fib Levels.

This is the Fib level on the 1-Week Chart. Each golden circle on the chart above shows each time that the price has bounced off of a Fib level.

The price is currently hanging around a 61.8% retracement on the weekly chart from the ATH with the start of this price movement being marked at $227, which was in September/October of 2015.

The reason for the low start of the Fib level is due to the fact that this is where the price movement legitimately began on the weekly chart. See the zoomed out view below:

Assuming that the price does bounce of the Fib level that Bitcoin is sitting at now, it would be poised to launch up toward the $9.5k region.

However, here’s the problem with that theory (let’s go back to the 1D chart).

So, there are two things that are going to happen here.

Either the price is never going to lift above that Fib level and it will fall through, or it’s going to break this long-term downtrend (since December 2017), and we’ll be in the midst of another bull run.

However, from what I see, there’s nothing that indicates that the price is headed to the “moon” anytime soon.

So, let’s examine what the scenario would look like in the event that the price fell through and the Fib level did not hold.

Conclusion

Things aren’t looking good on the weekly chart for Bitcoin, and it appears as though they’re getting even worse as time progresses.

Based on the volume analysis, Fib levels, downtrend resistance, emerging descending triangle pattern, and the imminent possibility that the price falls below the point where it’s at now, it seems as though the price is bound to decline precipitously over the next few weeks.

However, the bigger fear should be in those that are holding altcoins, because their value has been getting smacked the hardest and as the overall market cap decreases, Bitcoin’s market dominance increases.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Yes No