Bitcoin Price Looks South After Worst Daily Loss Since November
(Source: coindesk.com)

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(Original link: coindesk.com)

Jan 11, 2019 at 11:00 UTC markets
Bitcoin’s (BTC) price dropped by the most in seven weeks on Thursday, weakening the prospects of a bullish breakout above $4,100.
The world’s largest cryptocurrency by market value hit a 3.5-week low of $3,503 yesterday, before closing (as per UTC) at $3,627 – down 9.4 percent on the day. That was the biggest single-day drop since Nov. 24 and the fourth biggest daily loss of the last two months, according to CoinDesk’s Bitcoin Price Index (BPI).
Essentially, the hard-fought gains of the last two weeks have been erased in the last 24 hours. The cryptocurrency had carved out a bullish-higher low near $3,550 on Dec. 27 before crossing $4,000 on Jan. 6.
The follow-through to break above $4,000, however, was anything but encouraging. Moreover, signs of bullish exhaustion emerged near the crucial resistance of $4,130 (inverse head-and-shoulders neckline) and the demoralized bulls exited the market yesterday, leading to a sharp drop in prices.
As a result, the bears may be feeling emboldened and could attack the crucial support lined up near $3,550. As of writing, BTC is changing hands at $3,630 Daily chart
Bitcoin fell to $3,500 yesterday, confirming a bearish doji reversal on the daily chart. The cryptocurrency also closed below the crucial 50-day moving average (MA) support,
Further, trading volumes jumped to the highest level since Dec. 21, adding credence to the bearish move.
What’s more, the 14-day relative strength index (RSI) has breached the ascending trendline in favor of the bears.
With the odds stacked in favor of the bears, the immediate support of $3,566 (Dec. 27 low) could be breached soon. That would only bolster the already bearish technical setup. Weekly chart
On the weekly chart, BTC has created a bearish outside reversal candle – this week’s price action has engulfed the previous week’s high and low – having failed to penetrate the 200-week exponential moving average (EMA) for four weeks straight.
The candlestick pattern indicates that the week began with optimism, but is coming to close on a pessimistic note. As a result, it is widely considered a sign of bearish reversal.
Put simply, the doors have been opened for a re-test of the 200-week MA lined up at $3,250. Supporting that bearish case is the downward sloping 10-week MA. View BTC risks breaching the bullish-higher low of $3,566 over the weekend. That would add credence to the bearish setup on the weekly chart and open the doors to $3,250 (200-week SMA). A quick recovery above $4,000 would abort the bearish setup, although the probability of BTC picking up a strong bid in the short-term is quite low. A convincing weekly close (Sunday’s UTC close) above the 200-week EMA $4,148 will likely put the bulls back into the driver’s seat and allow a stronger rally towards $5,000.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
Bitcoin image via Shutterstock; Charts by Trading View
The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies . CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups....

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