Will Bitcoin Retest the Low?
Bitcoin is looking shaky.
On Sunday night, I was flicking through the charts and Bitcoin popped out to me.
Cryptocurrencies continue to go through heavy volatility in both directions and it doesn’t look like the ups and downs are done yet.
For Bitcoin specifically, it has waning momentum. That’s clear from three things:
Broke below the 200-day moving average despite its first test in about a year, then found it as resistance
Continuous rejection by the 10-day and 21-day moving averages, defining its short-term trend
Three consecutive lower highs (blue circles)
Trading Bitcoin
All of those observations had me cautious on Bitcoin. But then it was also resting on uptrend support with all of these waning observations. It’s no surprise to now see it cracking lower below support.
If Bitcoin finds it footing, we need to see a move back over $36,000 and preferably, back to last week’s high.
I’m not a big-time bear on Bitcoin — I’m only trading what I see. And what I see is an asset that looks like it wants to go lower.
If it does, my focus is on the $30,000 to $31,000 area. Twice now Bitcoin has staged a strong rally from this area. It was also support earlier in the year. If this level holds, we could have a bounce trade in play.
If it breaks, it’s possible we get a deeper decline and at that point, we can’t rule out a test of the ~$20,000 breakout level. The silver lining to that? It would likely be an attractive buying opportunity.
Still, we are watching for any possible upside rotations to signal that a potential bottom may be in.
Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.