Bitcoin (BTC) is taking its first pitstop in what looks like a new downtrend, with a relief rally above $8,000. Bulls are fighting to hold the $8,000 line within a thick band of price support drawn from the 2019 market. Bitcoin had been extremely oversold, so some degree of relief was almost inevitable. Our next key piece of information in forming our impressions of the current market structure is the strength of this retracement rally.
We start with the daily Bitcoin chart, and see that price has been held at the 9 exponential moving average (EMA). If the leading crypto is not able to close above the 9 in the next couple of days, we should expect that rejection to push price lower into this (blue) block of support — or even below it.
The histogram is looking strong so far in today’s trading day, arcing up parabolically, and if it closes in this aspect, we could expect more upside. However, the day is far from over.
Moving to the 4-hour + MACD chart, we see that a trading range has formed between the 21 and 55 EMAs on this timeframe. Bitcoin has not even tested the 55 yet, and is rather being held at the 0.382 Fibonacci retracement level. If this is the highest Bitcoin can put in on the relief rally, it will signify weakness and basically no chance of escaping the new downtrend.
We can note that the second leg up on the rally had a higher trade volume (Bitstamp exchange), although we see only slightly more buy volume. Moreover, the histogram has started arcing down at time of writing, with three hours left to go in this trading period. We will have to wait until later in the day, to see how the following 4-hour candle plays out — which will foreshadow which way the daily histogram goes.
Finally, in the background, Bitcoin dominance looks like it’s again rolling back over to the downside. Dominance is holding at a critical level, at about 69.5%, and if this level gives way, Bitcoin dominance could return to more reasonable levels. The leading crypto had not seen dominance levels above 70% since early-/mid-2017.
Overall, it seems rather more likely that Bitcoin will see at least one more leg down in terms of price. Furthermore, BTC dominance also looks likely to continue down. In this situation, we cast a gaze on the altcoin market to get our fix.
The views and opinions expressed here do not reflect those of CryptoGlobe.com and do not constitute financial advice. Always do your own research.
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