Technical Analysis and Market Entry: Bitcoin Subject to Another Wave of Selling 

  • Bitcoin price vulnerable to further downside risks, once consolidation period passes.
  • BTC/USD broke through a critical demand zone, smashing through the $8000 territory. 

BTC/USD: Recent Price Behaviour

Bitcoin price action has mainly been tilted to the downside, as the market bears maintain full control of the direction. BTC has been forced to trade down at its lowest levels seen since May. It comes after a critical support breach. BTC/USD had been flirting with a demand zone seen tracking from $8000 down to $7400. It has been active in cushioning the price from more significant downside since May. 

BTC/USD has since smashed through the noted zone and seen a daily retest, which does leave it vulnerable to further moves to the south. Given the length of service in providing support, it does mark as quite a significant technical development as the bears are now making solid attempts to grind down the $7000 price territory. Another psychological breach could spark much ‘FUD’ and additional panic selling. 

The change in trend for BTC/USD came into play at the back end of October. Bulls had managed to push the price to heights up within the psychological $10,000 territory. The aggressive jump north occurred between 25-27 October. Bitcoin had gained a chunky 38%, before losing momentum to the upside. Given how quickly and how much the price advanced, it made it vulnerable to downside risks, of a reversal. It has since given back those gains and more.

BTC/USD daily chart.

Weekly Chart View

BTC/USD via the weekly chart view remains significantly bearish, with the price running towards its fourth consecutive week in the red. The price within the noted time frame has shed a massive 31%. A critical rejection was seen at 31.8% weekly Fibonacci, to confirm the resumption of the move south. Bitcoin bears are working their way for a full reversal of the 2019 bull run. The price had started the year down at depressed levels of $3500. 

BTC/USD weekly chart.

Trade Recommendation 

Near-term price action is moving within a bearish pennant structure via the 4-hour view. It is BTC/USD consolidating following the recent drop, subject to further moves to the south. Entry around the current market price, with targets at; $6500, $6000 and then $5800. Stop to be placed at $8000.  

BTC/USD 4-hour chart.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Ken has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.