Published 4th September 2019
August has been quite a boring month as Bitcoin continues ranging between 12,000 and 9,500. There is now a clear pattern forming between these two numbers and a higher probability day after day that the price will continue oscillating for a few more weeks. The market seems to be divided between exaggerated optimism as soon as the price bounces more than 5% extreme fear with drops above 8% on a day. These numbers should just be above average daily volatility values; this leads us to believe that investors are currently uncertain about the future of Bitcoin. The fear and greed index recorded many extreme fear values between August 14 and August 2; the lowest value ever being 5 happening on August 22 when Bitcoin fell below 9,800. The several retest of the 9,500 level that did not break the previous lows are showing that many investors are ready to buy Bitcoin above 9,000 however the fact that we struggle to bounce less than 25% from our local low is clearly showing some weakness among the bulls. Volumes continue to fall and eventually we will see a violent move. We believe in a 70% probability of a break to the downside.
Weekly (W) Analysis
Analysis
We thought we will look at Ichimoku and compare with the 2015 period as there is not much to say with regards to trend lines, support and resistance on the weekly chart at the moment. Ichimoku is showing us that even though we are in an uptrend (we are above the cloud), there is a lot of room to move to the downside. We could easily and quickly fall to 6,500 (top of the cloud) and potentially even 4,300 (bottom of the cloud). The cloud becomes very thin after November and consequently very easy to break through. Hopefully the Bitcoin price will be far above from the cloud or moving up away from the cloud at that time as a move to the downside towards the cloud after October could be a very bad sign to retest the lows of 3,200. In 2015 we broke around the middle of the cloud and retested it shortly after. On this occasion we broke at the top of the cloud but we believ that the changes that we will touch the cloud again are actually still very high. If we manage to break bullish above 11,500 our next resistance will be at the last local high around 12,500.
Resistance and Support:
Double resistance (medium):
- Resistance with the descending line of the triangle, currently pushing us down at 10,800
- Resistance with the conversion line (Tenkan sen | in blue), likely to create some resistance and push us down before we reach 11,500.
Double support (strong)
- Support around 9,400 with the Moving average 20 (or 21 | the golden line) which has acted as support during the previous bull market
- Support with the resistance line at 9,386
Daily (D) Analysis
Analysis
There is much price compression with the Ichimoku cloud, the conversion line (blue) the base line (purple), the moving averages (50, 100) and the resistance line of the triangle. All this is happening in a USD1,000 range.
Resistance and Support:
- At least 3 support between 10,000 and 10,500
- Several resistances such as the cloud, the descending line of the triangle, the conversion line between 11,500 and 11,000
- Strong support at 9,300 (our previous lows)
If we break above the cloud (11,500) then we have further room to move as high as 12,500 (our previous high)
If we break below 10,000 we will retest the previous lows around 9,300
4 hours (H4) Analysis
Analysis
There is very little to say about the 4h chart. Price may move violently if it breaks above all resistance or below all supports.
Resistance and Support:
- Resistance at 10,800 (Triangle resistance line | light blue)
- Resistance at 10,800 (previous local high)
- Support at 9,300 (previous lows)
Summary
We still favour a further move to the downside as we believe we will break below 9,300 before mid-October. The trigger for a sharp decline may be a fake out rally just above 11,500.
As we approach it, we will keep an eye on the weekly 20 (21) Moving average and will go long or short depending on support or a break.
In the short term, we will start to open short positions with tight top losses in the range of 5% and targets in the 12-15%.