by Jamie Holmes
Bulls failed to break above $448/$450 and after muted price action, sellers have gained control of the market pushing away from critical resistance at $450 to around $429 at the time of writing, down on the open by just over 1.0%. The chart below illustrates the 4-hour price action on the BitStamp exchange and shows how the price has moved from above the Ichimoku cloud to below the Ichimoku cloud, which suggests that a downward trend will develop and we should see bearish momentum dominate. Also, notice how the Ichimoku cloud has changed colour from green to red, also providing a bearish indication. A brief retrace to around $440 may occur before BTC-USD dives deeper.
The relative strength index also indicates bears are dominating, since the index is below 50. There is more room to the downside as the index does not yet indicate oversold conditions since it is still above 30. A break below the most recent buy fractal at $425.01 will see an extension of the downward move.
On the other hand, a close above the conversion line, currently at $435.92 is required to validate a bullish outlook. Resistance will then be provided by the Ichimoku cloud which is around $444.54 to $448.00 for the next few days. Also, the most recent sell fractal is at $447.34 and a close of a 4-hour session above this level will give further bullish confirmation.
The longer-term trend is looking to be a downward trend as illustrated in the daily chart below. Yesterday the price action closed below the base line providing an indication of bearish momentum. Also, the lagging line has moved from above to below the previous price action and is breaking below the conversion line. The price action is now set to test support provided by the Ichimoku cloud in the $398.00 to $426.00 region. Long-term targets for sellers lie at $348.64 and $367.11 if the price action manages to break below the Ichimoku cloud. Further bearish confirmation will be given when the conversion line starts to trend downwards and a cross below 50 of the relative strength index looks imminent.
An interesting development in China is that while Bitcoin was trading pretty much unchanged, huge volumes in other virtual currencies were witnessed. For example, Ybcoin and Factom have seen huge prices and volume increases. In the last 24 hours, almost $3 million has been piled into Ybcoin and almost $2 million into Factom. Investors may be turning to other virtual currencies as debates about scalability and other issues have caused a rift in the community.