Today, we will try to assess the macro outlook of the bitcoin market for the BTC/USD pair and determine in which phase we areWe are and what to expect in the future.
Weekly timeframe
In order to assess what phase of the trend we are in, let's step back a step and analyze what has happened in recent months.
From the beginning of 2019 for several monthswe saw impressive growth, at the peak of which BTC valued around $ 14,000. During this rally, the first signs of a serious FOMO appeared, when many investors believed that this could be the beginning of a new large bull market, which would raise the BTC to new historical highs.
What followed is best described as a bullish flag pattern, a corrective descending channel in which late buyers were shaken out of the market while more patient ones tried to accumulate bitcoin at lower rates, waiting for a major uptrend to continue.
Finally, in January-February of this yearthere was a breakdown of the upper border of the bull flag, but the price could not hold above 10,000 dollars. Instead of building a larger rally with large volumes, there was a sharp turnaround and over the month the price fell by more than 60%, invalidating the version of the big bull flag.
Despite the fact that we are still in the correction phaseinside the upward macro trend, the invalidation of the bull flag took most investors by surprise. Since the EMA-100 on the weekly chart is above the EMA-200, indicating that the uptrend is still in force, in this last fall you can see a great opportunity to buy below the EMA levels. But in order to more accurately assess the validity of this assumption, let's see what the situation looks like on smaller timeframes.
Three day timeframe
On the three-day chart we see a lotinteresting signals to consider. Firstly, the downward movement stopped with almost perfect accuracy at the support level (former resistance) of about $ 4000. Although during periods of high volatility price fluctuations usually go far beyond the projected ranges, this drop was bought almost exactly from the support. So, today we can proceed from the assumption of high interest on the part of purchases from support at the level of $ 3600–4250. On a three-day chart, $ 4,000-4,100 looks like a key support level, the price behavior of which should be closely monitored if it still drops to this level.
Obviously, over the past two weeks, the pricerebounded somewhat and won back part of the fall, but failed to overcome the resistance level of $ 6900–7000. After such a significant (~ 60%) drop, it is logical to assume that the medium-term trend remains downward - an impulse of such a force is not so simple to stop and / or reverse. That is, in case of uncertainty, we must proceed from the fact that the trend is most likely to continue and most attempts to reverse it will be unsuccessful. An unsuccessful attempt to overcome the local resistance level will mean that in the coming days we are likely to see a new decline.
Daily timeframe
As can be seen on the daily chart, EMA-20acted as additional resistance at around $ 6800. It looks like a very clear and accurate retest of the local resistance level. EMA-100 on the daily chart has already crossed down the EMA-200. Although the bulls still have some time to regain control, the longer the EMA with periods of 100 and 200 show a bearish trend, the greater the downward pressure on the price will be.
4 hour timeframe
The bearish EMA crossing happened around $ 9,200,after the price did not hold above the psychological level of $ 10,000. Being in a steady downtrend, on March 20, the price unsuccessfully tested the EMA-100 level, which indicates the expected continuation of the bearish trend. EMA began to fall more strongly, the trend line was also broken. In my opinion, this looks like a two-step correction with a local top at $ 6946, and now the price is preparing to test the previous lows and support level again. Violation of this scenario is likely to signal a strong bullish rally.
Bullish scenario
With a retest of an important support level of about $ 4000bulls got some reason to raise prices from current levels, if only they could reverse the current bearish momentum. Everything in the range of $ 6,200 to $ 7,000 should be considered as resistance that must be overcome.
The $ 7,000 mark itself is a serious levelresistance and a critical mark that the bulls need to overcome in order to invalidate the two-stage correction and turn resistance into support. It is worth noting that a confident breakdown of these levels will take by surprise the majority of investors and traders following the trend. Taking into account the situation in the world, this scenario is not so unlikely, even if the existing trend, as if, suggests otherwise.
Another weekly chart with two additional lines of interest.The blue trend line is drawn from the lows of 2017, through the lows of December 2018 (~$3200) and canact as support in the event of another downward movement.As of today, this line is at $4850.Another line of interest is purple.The chart shows that the price tried to break through this lower border of the descending channel.Overall, this can be considered "oversold" territory and indicate a great buying opportunity.It should be emphasized, however, that all these zones and lines have already been tested in the precipitous fall on March 12, and a second chance to enter at such low prices may be possibleand not introduce yourself.
Bear script
Until the bulls were unambiguousin the manner of its strength, the impulse remains downward. If the downtrend remains valid, then it seems logical to retest previous lows and a key support level of about $ 4,200, and potentially lower. Ideally, I would like to see the retest and reaction of market participants at the following support levels (if these levels are not tested at all, this will be considered as a bullish signal):
Key levels
Support:
$ 4850 - blue line (ancient trend line)
$ 4300 - purple line (lower border of the channel)
4000–4100 $ - a key level of customer interest
3600–4200 $ - the main level of support for the breakdown of the channel boundary
Resistance:
$ 7000 - a key resistance level / disability point for the bearish scenario
$ 6500–7000 - zone of main resistance
$ 6200–6400 - low resistance zone
Conclusion
Although the overall medium-term trend after the big drop on March 12 with a loss of more than 60% of value is bearish, the market is now trading in "oversold" territory and mayAnother downward move is likely to beperceived by the bulls as an opportunity to accumulate more bitcoins at bargain prices.Failure to test lower levels will be interpreted as a bullish signal.
Until next time! And may the force be with you.
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