Bitcoin Price Analysis: Price May Be Due for a Bounce Soon; Bears Are Losing (6–28–2018)

This article will be covering recent Bitcoin price action and making predictions in the short-term.

This should not be considered to be financial advice. The information contained within should be used solely for informational purposes and taken as a reflection of the author’s opinion and research. Your investment decision is solely yours and yours alone. I will not advocate that you take a certain position on this coin.

Disclaimer: I also hold no position in Bitcoin or its competitors at the present moment and do not anticipate that I will do so in the near future, and if I do, I do not anticipate nor expect to benefit financially from whatever influence, if any, that this article will have on the price. I will also disclose that information publicly if the status of my positions change.

Bitcoin Price Analysis

Bitcoin 1D TF

Let’s Talk a Bit About the Chart Above

As I noted in the caption, this is Bitcoin on the 1D TF.

  • I drew a golden box around the point where it appears as though the bears are faltering. Right now, they are on a major support point ($6k — 6.1k). The candles that you’re seeing there (Heikin Ashi setting), are a reflection of the waning sell volume as well as the bears’ failure to push the price down past the support.
  • That area also shows that bulls have been able to consistently defend that area for several days in a row. What’s even more notable is the fact that there’s really low buy-volume in the markets right now.

How Do You Know That the Buy Volume is Low?

Great question.

Check out this graphic from CMC below:

This is the current traded volume (approximately) for Bitcoin over the last 24 hours.

Over the last 24 hours, the volume for Bitcoin has hovered around the total of $3.2 billion.

To put that in perspective:

This is a screenshot of the price/volume/market capitalization metrics for BTC on January 6th, 2018

On January 6th, the volume had reached a height of $23B+, and throughout that month there were several days where the 24H-traded volume exceeded that of $20B+.

That means that the current (at the time of writing) 24H traded volume is at a level that’s 85%+ lower than what it was before.

When you combine these facts above with the fact that the price of Bitcoin has fallen off of a cliff since that time period, it doesn’t take a rocket scientist to deduce that the buy volume of Bitcoin has decreased substantially.

What Does This Mean?

This means that the decrease in price that we’ve experienced throughout 2018 is not necessarily due to sell-offs strictly (although we’ve definitely had some of those), but more so from the fact that there just weren’t folks in the market that were willing to buy at the elevated levels that Bitcoin was at before ($10k, $15k, $18k+).

How is Any of This Information Relevant?

Because, when combining all of these facts together, it makes the inability of the bears to push past the $6k/$6.1k level and actually CLOSE a daily candle below there all the more significant.

The golden line in the picture above represents the support point that Bitcoin has failed to break through in the past few days.

To be specific, we can see that the bears have tried to break below this point (and close a candle) each of the past seven days and have failed to do so:

Declining Volume on the Chart Itself

You can see declining volume each day as well

Descending Triangle Formation

I know that the majority of traders still believe that we are in a symmetric triangle pattern, but I firmly believe that we are in a descending triangle pattern.

Check this out below:

As you can see in the picture above (zoomed out view of the daily chart), $6k has remained a very solid and reliable support point and the bears have YET to break through it.

For those that don’t know, below are some examples of the Descending Triangle pattern:

Source: http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:chart_patterns:descending_triangle_continuation

While this is a bearish chart pattern, there are times where the pattern breaks to the upside like this:

However, there are some cases, such as the one above, where there can be a breakout to the upside from the Descending Triangle, and it’s not the most uncommon thing to see (although it is on the ‘rare’ side of things).

Psychological Impact on the Market

The bears failing to pull the price below the $6k marker, more than likely will have the following psychological impact:

  • Some anxiety among bears that are currently short on Bitcoin. This can be seen in the waning sell pressure/volume on the charts (as noted above).
  • Individuals in the market seeing $6k as a reliable zone and/or “bottom” where they should/can place an investment and expect to see a reliable return on it that justifies their perceived R/R of the move.
  • Shorts closing and taking profit if they had shorted from a higher point because they probably don’t gauge the R/R at this point as favorable enough for them to remain in their short positions.
  • Bears simply taking profit.
  • End of Q2/beginning of a new month. For some reason, this tends to correlate with a change in trend/energy/price direction in markets around the world.

Conclusion

I am not insisting that Bitcoin is going to go on a massive bull run. I’m just stating that, in the short-term, it appears as though there may be some alleviation in the downward pressure of the pressure, which may result in some swift upward movement in the price of Bitcoin, and subsequently, the entire market as well.

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