Bitcoin: USD/BTC (BTC=X) Another Major Selloff Could Happen Soon
Bitcoin recently broke through the long-term support around the $7,800 to $8,000 area, indicating that a major selloff could follow. The price is consolidating above the $7,300 mark and could be hinting at another leg lower.
The 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside or that the selloff is more likely to gain traction than to reverse. The gap between the indicators is also widening to reflect increased bearish momentum.
However, RSI is heading higher to indicate that buyers are returning, and the oscillator has room to climb before reflecting overbought conditions. This could keep the correction going for some time, possibly taking the price for a test of the 61.8% Fib that lines up with a former support area and the 200 SMA dynamic inflection point.
A shallow pullback could already hit a ceiling at the 38.2% Fib around $7,700 or the 100 SMA dynamic inflection point at $7,600. Stochastic is still pointing down to indicate that sellers have the upper hand and could push for a break below consolidation. In that case, a bearish flag would be confirmed and bitcoin could be in for a selloff that’s the same height as the formation’s mast.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
The projected upper bound is: 8,148.21.
The projected lower bound is: 6,671.01.
The projected closing price is: 7,409.61.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 18 white candles and 32 black candles for a net of 14 black candles.
A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 19.1790. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 14 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 32.19. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 18 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -163.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 5 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 1 period(s) ago.
Rex Takasugi – TD Profile
FOREX BTC= closed up 17.520 at 7,470.550. Volume was 69% below average (consolidating) and Bollinger Bands were 41% narrower than normal.
Open High Low Close Volume___
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 7,883.42 8,886.82 8,876.51
Volatility: 58 54 76
Volume: 69,307 79,617 85,091
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FOREX BTC= is currently 15.8% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of BTC= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on BTC= and have had this outlook for the last 31 periods.
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