Today we will try to evaluate the macro perspective of the Bitcoin market on BTC/USD pair and determine what phase we are in and what to expect in the future.
Weekly timeframe
In order to assess the phase of the trend we are in, let us take a step back and analyze what has happened in recent months.
Since the beginning of 2019, we have seen impressive growth for several months, at the peak of which BTC's estimate reached about $14,000. During this rally, the first signs of a serious FOMO showed up, when many investors believed that this might be the beginning of a new big bullish market that will lift the BTC to new historical highs.
What followed is best described as pattern « bull flag » a corrective downward channel in which late buyers were pulled out of the market, while the more patient ones were trying to accumulate bitcoins at lower rates, waiting for the large uptrend to continue.
Finally, in January-February this year there was a break-up of the bull flag's upper bound, but the price couldn't stay above 10,000 dollars. Instead of building a larger rally with larger volumes, there was a sharp reversal and the price fell by more than 60% in a month, invalidating the version of the big bull flag.
While we are still in the correction phase inside the rising macro trend, the bullish flag disability took most investors by surprise. As the EMA-100 on the weekly chart is above the EMA-200, indicating that the uptrend is still in force, in this last fall we can see a great opportunity to buy below the EMA levels. But for a better assessment of the validity of this assumption, let's see what the situation looks like in the lower timeframes.
Three-day timeframe
On the three-day chart we see a lot of interesting signals to take into account. First, the downward movement with almost perfect accuracy stopped at the support (former resistance) level around $4000. Although in periods of high volatility, price movements usually go far beyond the predicted ranges, this drop was bought almost exactly from the support. So, today we can assume that there is a high interest on the buy side of the support at 3600-4250$. On the three-day chart, 4000-4100 $ looks like a key support level, the price behavior of which should be closely monitored if it still falls to this level.
Obviously, in the last two weeks the price has bounced back a little and played back some of the fall, but failed to overcome the resistance level of 6900-7000$. After such a significant (~60%) decline, it is logical to assume that the medium-term trend remains downward - the impulse of such strength is not so easy to stop and/or reverse. That is, in case of uncertainty, we should assume that the trend is likely to continue and most attempts to reverse it will fail. An unsuccessful attempt to overcome the local resistance level will mean that we are likely to see a new decline in the coming days.
The daytime timeframe
As you can see on the daily chart, the EMA-20 appeared as an additional resistance at around $6,800. It looks like a quite clear and accurate retest of the local resistance level. The EMA-100 on the daily chart has already crossed down the EMA-200. Although the bulls still have some time to regain control, the longer the EMAs with periods 100 and 200 will show a bearish trend, the greater the downward pressure on the price.
4-hour timeframe.
A bearish EMA cross occurred about $9200, after the price did not stay above the psychological level of $10,000. Being in a steady downtrend, on March 20 the price failed to test the level of EMA-100, which indicates the expected continuation of the bearish trend. The EMA started climbing down harder and the trend line was broken too. In my opinion, it looks like a two step correction with a local top of $6946 and now the price is preparing to test the previous lows and support again. A breach of this scenario is likely to signal the beginning of a strong bullish rally.
Bull Scenario
With a retest of an important support level around $4000, the bulls got some ground for the price to rise from the current levels, if they can reverse the currently prevailing bearish momentum. Anything between $6,200 and $7,000 should be considered a resistance that needs to be overcome.
The 7000$ mark itself is a serious resistance level and a critical point that bulls need to overcome in order to make a two-step correction and turn the resistance into support. It should be noted that a confident break-up of these levels will take most investors and traders following the trend by surprise. Taking into account the situation in the world, this scenario is not so unlikely, even if the existing trend, as if suggests otherwise.
Another weekly chart with two additional lines of interest. The blue trend line is drawn from the lows of 2017, through the lows of December 2018 (~3200$) and may act as support in the event of another downside movement. As of today, this line is at $4850. Another line of interest is purple. The chart shows that the price tried to break through this lower boundary of the descending channel. In general, it can be considered as a territory « oversold » and indicate an excellent opportunity for buying. It should be stressed, however, that all these areas and lines have already been tested in the rapid drop of March 12, and there may not be a second chance to enter at such low prices.
Bearish scenario
As long as the bulls have not unambiguously shown their strength, the momentum remains downwards. If the downtrend remains in force, it seems logical to retest the previous lows and key support level around $4200, and potentially lower. Ideally, I would like to see the retest and reaction of market participants at the next support levels (if these levels are not tested at all, it will be considered as a bullish signal):
Key levels
Support:
4850 $ - blue line (ancient trend line)
4300 $ - purple line (lower boundary of the channel)
4000-4100 $ - key level of customer interest
3600-4200 $ - basic support level when breaking the channel border
Resistance:
7000 $ - key resistance level / disability point for bear scenario
6500-7000 $ - main resistance zone
6200-6400 $ - lower resistance zone
Conclusion
Although the overall medium-term trend after the big fall of March 12 with a loss of more than 60% of value is m
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