Price Analysis: Intensification of Bearish Momentum Anticipated
Bearish momentum has dominated once again today in Bitcoin markets, with BTC-USD continuing to head south. Yesterday saw indecision amongst traders as the close was very close to the opening price. Buyers failed to push BTC-USD above resistance at $378.29. The chart below shows the 4-hour price action for BTC-USD on the BitStamp exchange and shows how buyers failed to maintain the price above the Ichimoku cloud, posting a brief high at $391.88 before moving back to equilibrium as indicated by the shaded area of the Ichimoku cloud. The price action is currently being contained by the Ichimoku cloud and signals that a breakout is imminent.
A breakout to the downside looks more likely as indicated by the relative strength index which is below 50. Bearish momentum is also signalled by the relative positions on the base (dark-red) and conversion (blue) lines where the base line moved above the conversion line and indicated a switch into bearish momentum. Furthermore, the price action closed below the conversion line in the previous 4-hour session, giving a neutral bearish signal; the conversion line will offer resistance going forward and acts as a good entry into short positions in BTC-USD. It is currently at $376.12. A bullish outlook is only validated if the price manages to close above the conversion line.
The fractal levels also indicate more risk to the downside. The price is currently very close to the most recent fractal support formed at $373.04, and a break of this level will see bearish momentum intensify. If this fractal level is broken and the market closes below this level at the end of the next few 4-hour sessions, then we will see sellers target fractal support at $363.73. A break of this level would open up the psychological support at $300 and fractal support around $294.
On the other hand, the fractal resistance at $380.00 is an important area for those looking to buy BTC-USD. If this level holds as strong resistance, then bearish momentum will dominate. However, if the market manages to break above $380 and establish a closing price above this level, we should see bullish momentum dominate and open up the $400 handle.
The short-term outlook is shown below and shows that at the hourly time-frame, the price action is already below the Ichimoku cloud. This suggests an extended downward move over the medium-term. However, notice that the cloud is very thin around $376, offering weak resistance at this level for the next 36 hours. A downward trend is also indicated to have started as the base line and conversion line are trending downwards in tandem foretelling a similar move will occur in the market.
Fractal analysis also supports a bearish view since the most recent fractal support at $374.22 looks to have broken. A bullish outlook over the medium-term is only confirmed once the most recent fractal resistance at $377.42 is broken.