Is another downside move on the cards?
Bitcoin staged a great (and very welcome) recovery last week, bouncing from the $6,500 low and putting in an inverse head and shoulders — a classic reversal pattern. The ‘shoulder’ of that pattern was around $7,300. Bitcoin rallied above that to $7,800, but over the weekend the price stalled out and sank back to the low $7k levels. At the time of writing, bitcoin is trading at $7,300.
What we are looking for now is a rally back up, successfully breaking that recent resistance at $7,800 and then ideally the longer-term resistance band from $8,000. Should that not happen, there’s a good chance we’ll sink back lower. While the inverse h&s was a promising reversal, nothing is set in stone. Falling below $7k would likely put another retest of those lows into play, and if $6,500 didn’t hold then we’d very much expect a significantly lower low — probably somewhere in the $5,500–$6,000 region.
Zooming out to the daily chart, it’s very clear that bitcoin is trading in a broad descending channel, and has been ever since the high of almost $14,000. A bounce from these levels could see a return towards the top of the channel, currently around $9,200, but anything in that channel still sits within the overall bearish trend.
For now, then, there’s still no sign of our Santa rally. Now that we’re well into December, it’s looking less and less likely we’ll see that before the end of the year. Instead, it’s possible that the big event this month will be a bottoming of the market. But we’re getting ahead of ourselves: we don’t have evidence either way that the next leg will be up or down. We’ll need to wait to see what happens with the current support level at $7,300, and — if we do see a move up — whether bitcoin can break $7,800.
Taking a step back from the day-to-day chart activity, we’ll move over to Bakkt — something we track as a measure of institutional interest. We’re seeing activity increase month-on-month, and last Wednesday Bakkt futures set a new volume record of $42.5 million — more than doubling the recent record of $20 million. Daily volumes have roughly doubled from a month ago. We’ll make a prediction — a shot in the dark, just for fun — that the first $100 million day will happen before the end of 2019.
We haven’t said much about fundamentals this time, including hashrate, which we’ll return to in our Friday report. We’ll also be taking a closer look at the halving this week, since this is a keenly-anticipated event in crypto.
Article by Moonhub
