TA of the Day: Bitcoin Fails to Hold Above 60,000! Will the Slide Continue?

By Investor Empires On Aug 28, 2024

Bitcoin price failed to stay above the $60K level on Wednesday.😔

The drop came after a short-lived rally following Federal Reserve Chairman Jerome Powell’s recent speech in Jackson Hole.

The past three months have been tough for orange bean traders around the world, with Bitcoin dropping over 12% in value and still failing to retest its all-time high of nearly 74,000 reached earlier this year.

Analysts believe that profit-taking by traders and low trading volume during this time of year may have contributed to the decline.

However, Bitcoin is still seeing inflows into U.S. ETFs, suggesting continued investor interest. However, concerns that the U.S. government may sell confiscated Bitcoin could put additional pressure on prices.

The recent correction may also indicate a return to more stable levels after the initial support provided by expected interest rate cuts by the US Federal Reserve.

What about the technical forecast for Bitcoin?

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

Let’s focus on the current technical setup of Bitcoin (BTC/USD) Based on the daily chart:

📈 Technical analysis of BTC/USD on daily chart

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

Exponential Moving Averages (EMAs):

10 period exponential moving averageThe price is at 61,046.16. The price is currently below this level, indicating a short-term bearish momentum. Down The slope indicates recent short-term selling pressure.
20 period exponential moving averageLocated at around 60,940.00. The price is less This level, which reinforces the short-term downtrend. Down The slope of the 20-period exponential moving average indicates increasing bearish momentum.
50 period exponential moving averageIt is located at the level of 61,575.91. The price is also less This level confirms the medium-term bearish momentum. Down The slope indicates that the medium-term trend is in favor of bears.
200 period exponential moving averageIt is located at 59,613.08. The current price is: close This level indicates that the long-term trend is being tested. Relatively sloped levelindicating a potential support area.

Keltner channels (KC):

Upper bandLocated at 66,434.81. The price is good. less This level indicates that the recent price action has been bearish and closer to the middle and lower ranges.
Middle line (20-period exponential moving average)The price is at 60,940.00. The price is currently below the middle line of the Keltner Channel, indicating a bearish bias.
lower bandThe price is at 55,445.19. The price is closer to the middle of the channel, indicating potential room for further decline towards the lower band if the bearish momentum continues.

Moving Average Convergence/Divergence (MACD):

MACD line (2.47) is above the signal line (-161.27) and both lines are above the zero line.
The chart is positive but decreasing, indicating weak bullish momentum.

🕵️ Key Notes

Price action:

Let’s analyze the price action of Bitcoin (BTCUSD) from its high at the end of July:

Big rise at the end of July: The price reached a local high of around 70k at the end of July.
Initial decline: After this peak, a sharp decline occurred. The price dropped to around 65,000, resulting in a large red candle.
Unification: After the initial decline, the price stabilized between around 65,000 and 68,000 for several days, forming a series of smaller-bodied candles.
Renewed selling pressure: In early August, selling pressure intensified, and the price fell below the consolidation range, falling to around 62,000.
Attempt to bounce back: There was a brief attempt to rise to around 65,000, but it was quickly rejected.
Sharp decline: Mid-August saw a sharp decline, with the price falling from around 65,000 to a low of around 55,000 in a single day, forming a long red candle with a large lower wick.
Volatile recovery: After this sharp decline, a strong recovery occurred, and the price quickly recovered to around 60,000-61,000 over the next few days.
Resistance at previous support: The 60,000-62,000 area, which was previously a support, has now turned into resistance. The price has struggled to break this level convincingly.
Range trading: Bitcoin has entered a range bound phase, fluctuating between around 58,000 and 62,000.
Failed escape attempt: There was a brief attempt to break the 62000 level but it was quickly rejected.
Recent downward pressure: The recent price action shows renewed bearish pressure, with the price falling back towards the lower end of the recent range, at around 59,000.
Low altitudes: Each recovery attempt has resulted in a lower high compared to the previous peak, indicating weak upward momentum.
Higher dips: Despite the overall downtrend from the July high, the price has been making slightly higher lows since the mid-August low, which could form a descending triangle pattern.

In short, price action since the end of July has been mostly bearish, marked by a series of lower highs and increased volatility.

The market has moved from a clear uptrend to a more uncertain and range bound environment with a slight downside bias. The price is currently consolidating in a narrow range, indicating that a big move could occur once this range is broken in either direction.

Main levels:

60,000: Important psychological level close to the 20 EMA
65000: Last resistance level
55000: Strong support level (lower Keltner Channel)

Support and resistance levels:

High resistance: $65,000-66,000 (recent highs and upper Keltner Channel)
Immediate resistance: 61000-62000 (20 and 50 EMA)
Instant support: Around 58000-59000 (recent lows and 200 EMA)
Strong support: 55000-56000 range (lower Keltner channel and previous lows)

🤔 Possible trade scenarios

He is BTC/USD Buy or Sell?

Long bias:

Point of ConsiderationConsider entering a buy position if the price finds support at the 200-period EMA and starts showing signs of a reversal, such as a bullish divergence on the MACD or a strong bullish candlestick pattern.
Point of cancellationConsider setting a stop loss below the 200-period EMA at around 59,000 to manage risk.
potential targetWe expect a move back towards the middle Keltner channel line at 60,940 or higher in case of a reversal.

RationaleThe 200-period EMA may act as a strong support level, and any signs of an upward reversal may present a buying opportunity, especially if broader market sentiment improves.

Short bias:

Point of ConsiderationConsider entering a short trade if the price drops below the 200-period EMA at 59,613 or if there is a bearish continuation pattern on lower time frames. Another possible entry point is a rejection at the 10-period EMA.
Point of cancellationConsider setting a stop loss above the 20-period EMA at around 61000 to manage risk.
potential targetWe expect a move towards the lower band of the Keltner Channel at 55,445 if the downtrend continues.

RationaleStrong bearish momentum, confirmed by the MACD and the price position below the middle Keltner Channel line and all major EMAs, suggests further downside potential. The 200-period EMA is a critical level to watch, as a break below it could trigger a major sell-off towards the lower Keltner Channel range.

📝 TAOTD Summary

Bitcoin is showing a mixed trend with recent volatility and short-term bearish momentum.

Current positionThe price is in a downtrend, testing the 200-period EMA for support. The bearish momentum is confirmed by the MACD and the price position below all major EMAs and the middle Keltner Channel line.
directionThe overall trend is down, with the price below the 10, 20 and 50 period EMAs. The 200 period EMA is a critical level that may determine the next big move.
Support/Resistance Support is at 59,613 (200-period EMA), with resistance at 61,046 (10-period EMA) and 60,940 (middle Keltner Channel line).
batchThe MACD indicates strong bearish momentum, with further declines possible if the price drops below the 200-period EMA.

Bitcoin is in a consolidation phase and its market structure indicates that Bitcoin is in critical point.

The long-term uptrend is facing short-term downward pressure.

Be careful, as the current structure suggests a big move in either direction could occur once the consolidation phase ends.

Bitcoin price action shows recent Conflict between buyers and sellerswith Short term bearish bias Clear in the last movements.

the Narrow cluster of EMAs and location within Keltner Channel Indicates that the market appears to be in a state of Frequencywith major resistance around 60,000-61,000 and support around 57,800-58,000.

The recent failure to break below the 20-day EMA suggests that the bears may have a slight upper hand in the very near term, but The overall picture remains mixed..

👀 You should watch the 200 period exponential moving average closely.

The price interaction with its 200-day EMA and the resolution of the current range is likely to determine the next major trend.

A break below this level could signal a further decline towards the lower band of the Keltner Channel, while a reversal at this level could provide a buying opportunity.

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