Bitcoin’s Death Cross Happened. Now What?
Bitcoin Ranges While Traders Wait For A Breakout Either Way
The last time I wrote a proper analysis of bitcoin’s price chart was about a month ago. I left with the following chart:
The following daily chart shows the current state of play:
Chart 2 has the same support and resistance levels as before — because price has memory, and traders love patterns — except that it’s up-to-date and shows the 50-bar moving average (MA) crossing recently into the 200-bar MA, supposedly confirming that a downtrend is in play.
To recap…
Where bitcoin has been:
After trying to break the ceiling at $65,000 in April, bitcoin had been on a roller-coaster ride, orbiting around $55,000, crossing convincingly into its 50-MA line before breaking below support at $45,000.
Elon Musk’s tweets had a lot to do with those volatile moves. And then China roared, banning bitcoin mining and bitcoin trading on domestic exchanges. These were mostly rehashes of previously expressed policy statements, but they made the markets nervous regardless.
Where bitcoin is:
BTCUSD has been trading widely around $35,000. The way price has been behaving lately, it seems there is firm market support below $27,900, with no indication of strong offers above $42,000. At the same time, markets had seemed fixated on the then-probable advent of the “death cross,” when the 50-MA crosses below the 200-MA on bitcoin’s daily chart.
Market observers got the death cross they wanted on June 20, but does it really presage a new downtrend?
I argued in my last article that the downturn was actually confirmed much earlier after bitcoin broke below the 50-MA, and when that moving average began to turn downwards thereafter.
But is bitcoin in a bear market?
Whether bitcoin is in a bear market or not, I don’t know. And frankly, I don’t really care.
Where bitcoin might be:
No one is sure how strong the bids are, but if bitcoin bears have greater selling power, the digital currency will need to trade convincingly below $25,000 and stay there to confirm any bearish bias.
On the other hand, the offers above $42,000 look pretty weak. It probably won’t take much to take price action back above $45,000. Maybe Musk can tweet a few more U-turns.
And then there’s one more thing to consider.
Did anyone notice how when bitcoin was trading above its 50-MA, its price drew closer and closer to that moving average as the cryptocurrency appreciated, before it failed to break through $65,000 and then eventually fell below the 50-MA?
Now that the 50-MA is sloping down, you can see that price action is below that moving average.
But notice how price action gets closer to the 50-MA from below. The reader may see this in Chart 3 below.
As long as bitcoin fails to make significantly lower daily closes in the next few days, it would not be far-fetched to see it cross back above the 50-MA in the coming weeks if not sooner.
As I mentioned before, the support and resistance lines in all my charts are static and will not change.
Bitcoin is currently ranging inside the yellow box in Chart 2, which has the same upper and lower boundaries as that of the orange box. The green zone only serves to highlight that price action seems to pivot around $35,000.
And bitcoin does look like it may cross above the 50-MA to reverse its current downtrend.
It would seem that bitcoin would need to trade above or below the yellow box for there to be any semblance of a trend in any direction.
For a little more clarity, here’s the same chart zoomed in:
All displayed chart support/resistance lines are either historical levels or actual confirmed order book levels currently being traded by major players based on available market intelligence.
This content is for educational purposes only. It does not constitute trading or investment advice. Past performance does not indicate future results. Do not invest more than you can afford to lose.
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