TA of the Day: Bearish Momentum Builds in Bitcoin

US government Over 10,000 Bitcoins Moved Recently (BTC) from a government-linked wallet, a transaction worth about $600 million, to a Coinbase Prime-linked wallet.

The move follows a previous $2 billion transfer in late July. The U.S. government currently holds about $12 billion in bitcoin, much of it from law enforcement actions such as the Silk Road seizure.

the Coinbase was recently awarded by the US Marshals Service. A contract to manage large-cap crypto assets. So, this transfer may be in favor of Security purposes Instead of intending to sell.

While it is unclear what will happen to the bitcoins after the transfer, should the cryptocurrency market be concerned that the government might sell these coins, which could flood the market with supply and cause prices to fall?

It seems that this is exactly what might happen now.

Welcome to Teaching Assistant of the Day (TAOTD)! 👋

Let’s focus on the current technical setup of Bitcoin/US Dollar Based on the 4-hour chart:

📈 Technical analysis of the BTC/USD pair on the 4-hour chart

Using the technical analysis concepts we covered in our Forex course, let’s analyze Bitcoin/US Dollar.

Moving Averages (SMA):

1. 10 period simple moving average: It was set at 59,139. ​​The current price is less This level indicates short-term bearish momentum. Down The slope indicates continued pressure on the price.
2. 50 period simple moving average: It is set at 59,501. The price is also less This level confirms the downtrend in the medium term. The slope is Downwhich supports the continuation of the downtrend.
3. 100 period simple moving average: It was placed at 60,184. The price is less This level, which reinforces the bearish expectations. Down The slope indicates that the downward momentum continues in the medium to long term.
4. 200 period simple moving average: It is set at 62,894. The price is very high. less This level indicates a long-term downtrend. Down The slope indicates that the long-term downtrend is well established.

Relative position of moving averages:

• the 10 period simple moving average He is less the 50 period simple moving averageand it is less the 100 period simple moving averageand all three are less the 200 period simple moving average.
• This alignment in a bearish order (short-term simple moving averages are below long-term simple moving averages) strongly supports the continuation of the downtrend across multiple time frames.
• the expansion Gaps between these moving averages indicate increasing bearish momentum.

Market structure:

• General structure: The market structure is mostly bearish in the short to medium term, with a series of lower highs and lower lows since mid-July.
• Change personality (chouch)The last change in character occurred when the price dropped below 60,000 after previously forming a higher low.

Relative Strength Index (RSI)

• Relative Strength Index (14)The RSI is currently at 38.16, indicating that the market is approaching Oversold conditions.
• This indicates that while the overall trend is down, a short-term recovery is possible due to the oversold nature of the market.

🕵️ Key Notes

price action:

Let’s analyze the recent price action of the BTC/USD pair based on the chart:

1. General downtrend: The price has been in a general downtrend since mid-July, marked by lower highs and lows.
2. Previous height: In late July, Bitcoin hit a high of around 70,000, marking the beginning of the current downtrend.
3. Big drop: After the high in July, we saw a sharp drop to around 53,500 in early August, which represents a significant drop in prices.
4. Attempt to recover: After hitting a low of 53,500, there was a notable recovery attempt, with the price bouncing back to around 62,000.
5. Rejection and resistance: The recovery was met with resistance at the 62,000-63,000 level, coinciding with the 100-day simple moving average, which led to rejection.
6. Unification stage: For about a week in mid-August, the price settled in a range between $58,000 and $61,000.
7. The recent sharp decline: The recent price action shows a sharp decline from the consolidation range, falling below 58,000 and dropping to current levels around 57,115.
8. Increased volatility: Recent candles show increased volatility, with longer wicks indicating indecision and rapid price swings.
9. Height: There is a significant increase in trading volume accompanying the recent price decline, indicating strong selling pressure.
10. Support Test: The current price is testing recent support levels, trying to stabilize after a sharp decline, with the immediate focus on the 56,700 area.

Support and resistance levels:

• Long-term resistance: 70,000 (July peak)
• The Great Resistance:62,755 (aligned with the 200-period simple moving average) is a crucial resistance level that the price needs to overcome to reverse the downtrend.
• immediate resistanceWe notice immediate resistance at the 60,000 level, in line with the 100-period simple moving average, where previous attempts to break higher failed.
• Instant supportImmediate support is found at around 56,700, with further support at 53,500, in line with the previous price action and a significant decline.
• Main support:53,500 are important levels to watch, with 53,500 being a critical level where buyers may step in more aggressively.
• Psychological support: 55,000 (approximate figure).

Relative Strength Index (RSI)

• Most popular Downconfirming the downward price trend.

Volume analysis:

• Volume has increased slightly during the recent decline, suggesting that the move lower is supported by stronger selling pressure.

🤔 Possible trade scenarios

He is BTC/USD Buy or Sell?

The following trading scenarios are provided for educational purposes only. Since they do not include full risk management practices, they are not intended to serve as actual trading recommendations, but rather as food for thought to help you generate your own trading idea.

Long bias:

• Point of ConsiderationConsider entering a buy position if the price finds support near 56,700 and shows signs of a bounce, such as a bullish reversal candle pattern or positive divergence on the RSI.
• Point of cancellationConsider placing a stop loss below the 55,000 level to manage downside risk.
• potential targetThe initial target will be 59k, and the secondary target will be 60k.
• RationaleThe bounce from the 56,700 support level, coupled with the RSI approaching the oversold zone, suggests a potential short-term upside. However, given the broader downtrend, this would be a counter-trend trade with tighter risk management.

Short bias:

• Point of ConsiderationConsider entering a sell position if the price fails to break the 60,000 resistance level and shows signs of further downside momentum, such as a rejection at resistance or continuation patterns like a bear flag.
• Point of cancellationConsider setting a stop loss above 60,500 to limit exposure to a potential bullish breakout.
• potential targetThe initial target could be 53,500, with potential for further decline if the bearish momentum continues.
• RationaleA breakout above key resistance levels coupled with an overall downtrend suggests that a continuation of the downtrend is more likely, making a short position appropriate.

📝 TAOTD Summary

Recent price action suggests that Bitcoin is experiencing High selling pressure.

It is at a critical crossroads, testing recent lows and approaching critical support levels.

Traders will likely be watching closely to see if the current support holds or if there will be another breakdown.

The market structure on the 4-hour chart indicates that the BTC/USD pair is in a bearish phase, with the potential for further decline.

The breakdown from the recent consolidation, the sharp move down with increasing volume, and the alignment of technical indicators (price below the simple moving averages, and the RSI trending down) support this view.

However, the approach to important support levels and the potential for oversold conditions suggest that a bounce or consolidation may occur in the near term.

The overall structure remains bearish until there is a clear break above the recent lower highs.

The key levels to watch immediately are the support level of 56,700 (a break below it could accelerate the downtrend) and the resistance zone of 59,000-60,000 (a break above this level could indicate a potential trend reversal).

You should closely monitor the price action at these levels to identify ideal entry points.

This content is for informational purposes only and does not constitute investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to ensure you understand the risks involved.