by Jamie Holmes
The chart below illustrates the long-term outlook with the daily price action for BTC-USD. In the aftermath of the Bitfinex hack, BTC-USD posted a fresh low at $465.28 but has since recovered above $560. However, after struggling to break resistance at $580, BTC-USD has continued downwards.
The chart below highlights that the lagging line (purple) has moved from above to below the Ichimoku cloud, confirming that a long-term downtrend is in play. Moreover, strong bearish momentum is indicated by the Awesome Oscillator which is negative and trending downward. The price action is currently wedged between the conversion (blue) and base (red) line which will provide support and resistance respectively.
Therefore, we should look to buy BTC-USD if we get a daily close above the base line, i.e. above $574.73. The market will then look to test resistance provided by the Ichimoku cloud from $609-$650. However, if there is a daily close below the conversion line today, i.e. below $561.39 then we should see the market tend toward the fractal support at $465.28.
The medium-term outlook is displayed below with the 4-hour price action for BTC-USD. The price is currently below the Ichimoku cloud suggesting more likelihood for moves to the downside. Moreover, the price action has recently closed below the conversion line giving a bearish signal. BTC-USD will now look to move towards the base line which is providing an equilibrium level at $537.04. Also, the base line will offer support going forward.
The most recent buy and sell fractals, at $552.00 and $581.06, serve as important support and resistance levels respectively. Therefore, a downward move will be exaggerated with the break of support at $552.00 and we will most likely see a dive below $500. On the other hand, a sustained break above $581.06 should reinvigorate bulls in the market and see further gains toward $600.
Notice that the Ichimoku cloud projected forward is very thin, suggesting only weak resistance (or support) provided by this area. The Awesome Oscillator is indicating some facilitation in the market by bulls but has not yet moved above the threshold at zero. Until the Awesome Oscillator moves above zero, the bearish outlook with regards to momentum will remain intact. In terms of volume, there is higher volume today on the BitStamp exchange as compared to yesterday, suggesting more interest in the market’s current direction.