by Jamie Holmes
BTC-USD is hardly changed on today’s open, currently up 0.37 percent on the BitStamp exchange with the price at $577.15. The market has been floating around $580 for the past 48 hours, and price action has been relatively quiet relative to the run-up to the high $500s. Going forward, the risk is more weighted to the downside and there is a higher likelihood of bearish momentum starting to dominate in Bitcoin markets. The chart below illustrates the 4-hour price action and shows how the market has closed below the base (dark-red) line, which currently provides resistance at $578.72.
Also notice that the base line is trending above the conversion (blue) line suggesting bearish momentum is in play presently. The market is currently looking to break the most recent fractal support at $575.05. A 4-hour session close below this level will signal bearish momentum and see the price action dive into the support zone provided by the Ichimoku cloud, i.e. around $536–$567. Ideally, short positions could be entered into at the resistance levels provided by the conversion line and base line at $577.50 and $578.72 respectively.
On the other hand, to invalidate a bearish outlook, we require a 4-hour session close above the base line. The markets will then look to target fractal resistance at $584.25. Also, notice that the Ichimoku cloud is not trending at all and suggests the market may continue to range between the two fractal levels indicated on the chart with the yellow rays. When the cloud starts to move in either the up or the down direction, then this could foretell the next market movement.
The shorter-term outlook is displayed below with the hourly price action for BTC-USD. The most recent fractal buy and sell levels are illustrated with the yellow rays on the chart. If the market manages to break the fractal support at $572.00, then we should see bearish momentum intensify and see the market test psychological levels at $560 and $550. The Ichimoku cloud is red, suggesting there is a higher probability of a downward move over the short-term. This is also confirmed by the relative positions of the base and conversion lines, where the conversion line is below the base line indicating bearish momentum is in play.
The market formed a fractal sell level at $580 earlier today and this aligned with the Ichimoku cloud, suggesting strong resistance around $580. However, both the conversion line and base line are not trending, suggesting the market is taking a breather; we should be on the lookout for these lines to start trending to give an indication of where the market will move over the next 24 hours. There is a higher likelihood that the conversion and base line will start to trend lower bringing the price action lower since the price action is below a red Ichimoku cloud. This is telling us that short-term dominance is held by BTC-USD sellers.