In short: speculative long positions, target at $19,500, stop-loss at $8,600.
Bitcoin has depreciated, the comments on Bitcoin have become more bearish and the overall situation is quite tense. Not tense enough just yet.
Bitcoin is in a wave of depreciation, and this has transpired from price movement to the comments on the Internet. In an article on CoinDesk, we:
Bitcoin risks falling to $9,000 in the next 24 hours, having dived out of a narrowing price range on Wednesday. A violation there would expose the next support lined up at $8,500.
The breakdown looks legitimate as it is backed by a surge in selling volumes. The daily chart indicators are also reporting bearish conditions.
A weekly close (Sunday, UTC) below $9,533 would confirm a double top breakdown on the weekly chart.
The bearish case would be invalidated above Wednesday’s high of $10,280, although that looks unlikely.
OK, so the idea hear is that there is a breakdown. And it’s understandable that a move down has caused a lot of Bitcoin enthusiasts to question the strength of the currency, at least in the short term. By the same token, a similar move up could have easily resulted in more bullish views on the market. It is important, however, that price is not everything. In other words, a move down is not necessarily a bearish indication and a move up is not necessarily a bullish indication. We have to look at the context.
Short-term Outlook Unchanged
On theBitStamp chart, we are seeing the move down.
If you recall our recent comments:
The most visible development is the rebound from the 2.618extension. This stopped the move to the upside. And it was not the first time this happened. Bitcoin went up above this level twice before the most recent time, but it rebounded to the downside on both occasions. So, altogether, this level was in play three times in the recent past, and this makes this level potentially more important in the future. Right now, Bitcoin is smack in the middle of the distance between the 1.618 and 2.618 extension levels. Since there has been no important change in the short-term outlook, it remains bullish.
In spite of the recent depreciation, there has been no indication of a change in the short-term outlook. We could potentially see such a change in the days to come but we haven’t seen it just now. This means that the short-term outlook remains bullish.
Support Very Close
On theBitfinex chart, the developments are more tense than on the short-term chart.
In our previous alert, we wrote:
The long-term chart shows that Bitcoin is between two potentially important levels – the 50% and 61.8% Fibonacci retracements. So, although the specific levels are different, the situation is actually relatively similar to what we saw on the short-term chart. So, what level can we currently observe for signs that the situation is changing? The most important level seems to be $12,000. It is at this point that Bitcoin can test the move to the upside and afterwards we have $13,000, which could serve as a confirmation that the move up is actually going full steam ahead. On the other hand, levels around $9,000 and below could be a sign that the situation is becoming more bearish. We haven’t seen either of these developments just yet.
Contrary to the short-term chart, we are on the brink of a change here. Bitcoin’s move down has brought it to the 61.8% Fibonacci retracement level based on the move from $3,000 to $20,000. This is the most important level we have seen since mid-June. If we see a confirmed breakdown below this move, the situation might change and the outlook might become bearish. The main point here is that “on the brink of a change” is not exactly “in change territory.” Additionally, previous moves to this level resulted in rebounds to the upside. This also makes this level more important – a break below it could shift the outlook quite profoundly. This is not the case just yet, but keep your eyes peeled.
On an administrative note, due to my travel plans, there will be no Bitcoin Trading Alerts until Monday, September 23, 2019.
Summing up, in our opinion long speculative positions might be favorable at the moment. The focus has shifted but we have not seen enough bearish signs just yet.
Trading position (short-term, our opinion): long positions, target at $19,500, stop-loss at $8,600.
Bitcoin Trading Strategist