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Technical Analysis

Weekly Bitcoin Technical Analysis October 7th, 2019

Photo of Author Chris Colin
October 7, 2019
Chris Colin
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Bitcoin (BTC/USD) has shown extended weakness since the unsuccessful retest of $8 500 ($11 326) last Tuesday. That level was the 50% retracemement level of the entire move from $3 122 to $13 880 ($4 159 – $18 494 CAD), which at the time, was sitting right at both the 200-day simple moving average (MA200), and the 4-hour 50-bar simple moving average (MA50). BTC has since been unable to regain both moving averages as support.

Reduced trading volume on the daily chart might potentially be attributed to China’s golden week which is a week-long public holiday, although Chinese traders are expected to be back at their desks this week so it is yet to be seen whether this dip will be bought up, or if lower levels are being anticipated.

On the weekly chart, BTC has recorded 4 consecutive red weekly candles for the first time in 2 years. The 100-week simple moving average (MA100) continues to hold as support between $7 700 – $7 800 ($10 259 – $10 393 CAD), after retesting the level 3 times since the drop from $10k.

A weekly wick below this level could see BTC follow through with a 1.618 Fibonacci extension of the drop from $12 325 to $9 320 ($16 423 – $12 418 CAD). This would be a drop to around $7 462 ($9 943 CAD), to potentially establish a major low at the same swing low support which held during the month of June earlier this year, provided BTC can achieve a weekly close above MA100.

The bullish trend is still marginally in tact on the weekly ADX/DI indicator (trend strength / trend direction), with +DI (bullish trend direction) still slightly above -DI (bearish trend direction). ADX trend strength is still declining, however, and only slightly above the 25 level now, so the bulls will need to step up and take the reigns soon, in order to avoid a trend reversal on the weekly chart.

If BTC can regain $8 500 ($11 326 CAD) as support, the next level of major resistance on the weekly chart is $8 950 ($11 925 CAD), which is a 0.382 Fibonacci retracement of the recent drop from $10 949 to $7 714 ($14 588 – $10 278 CAD), followed by the $9 331 – $9 386 ($12 432 – $12 506 CAD) major horizontal resistance range, which served as critical support for the larger corrective triangle where BTC eventually broke down, and also aligns with the 50% retracement level of the recent drop from $10 949 to $7 714 ($14 588 – $10 278 CAD).

If the $7 462 ($9 943 CAD) weekly support does not hold, or if BTC closes below weekly MA100, there will then be major support at $7 231 ($9 635 CAD), which is major horizontal support on the daily chart and the 0.618 golden ratio Fibonacci retracement level of the entire move from $3122 to $13 880 ($4 159 – $18 494 CAD). Below this level, BTC has major horizontal support and the 50-week simple moving average (MA50), between $6 700 and $7 000 ($8 927 – $9 327 CAD).

On the daily chart, BTC lost and unsuccessfully retested the 200-day simple moving average, and now it is yet to be seen whether BTC can establish a major low and regain the daily MA200 as support, or whether BTC is set to continue with the current down trend, where there would be the potential for an eventual death cross between MA50 and MA200 on the daily chart, and would reflect a bearish trend reversal on the higher time frames.

There is major horizontal resistance on the daily chart between $8 200 and $8 270 ($10 926 – $11 019 CAD), followed by the $8 400 – $8 570 ($11 192 – $11 419 CAD) resistance range (between the 0.214 Fibonacci retracement level of the drop from $10 949 to $7 714 ($14 588 – $10 278 CAD), and the 200-day simple moving average).

Above this level, there is major horizontal resistance at $8 735 ($11 638 CAD), followed by the $8 950 – $9 078 ($11 926 – $12 097 CAD) resistance range (between the 0.382 Fibonacci retracement level and $9 078 / $12 097 CAD major horizontal resistance level). This is followed by the $9 386 – $9600 ($12 507 – $12 792 CAD) resistance range, which was the previous critical horizontal support level of the corrective triangle which BTC broke down from, the 50% retracement level of the drop from $10 949 to $7 714 ($14 588 – $10 278 CAD), and the 50-day simple moving average.

If BTC manages to close above $9 600 ($12 792 CAD), BTC will then have to contend with the $10 256 ($13 665 CAD) resistance level, which is the 100-day simple moving average (MA100) and the 0.786 Fibonacci retracement level of the drop from $10 949 to $7714 ($14 588 – $10 278 CAD).

BTC has major horizontal support at the current $7 700 – $7 800 range ($10 260 – $10 393 CAD), followed by the $7 462 – $7 622 ($9 943 – $10 156 CAD) support range, which is between the 1.618 Fibonacci extension level of the drop from $12 325 to $9 320 ($16 423 – $12 419 CAD), and major horizontal support.

Below this level, BTC has support between $7 120 and $7 231 ($9 487 – $9 635 CAD). This is between major horizontal support and the 0.618 Fibonacci retracement level of the entire move from $3 122 to $13 880 ($4 159 – $18 494 CAD).

ADX/DI is reflecting a bearish trend on the daily chart, with -DI well above +DI, and significant bearish trend strength at the 67 level.

RSI is also well below centerpoint which confirms the bearish bias. RSI is in oversold territory on the daily chart which is looking ripe for a bounce, however, as we have seen in the past, BTC can remain in oversold territory for extended periods of time, so it is yet to be seen whether a bounce will materialize from these levels.

On the 4-hour chart, BTC is showing hidden bullish divergence on the Money Flow Indicator (MFI), where MFI is printing higher lows but price is printing lower lows. This could signal a potentially bullish bias over the short term.

ADX/DI is still showing a weak bearish trend. -DI is marginally above +DI, however, ADX (trend strength) is still below the 25 level, so the bias can still easily flip bullish over the short term.

Bitcoin has immediate support at around $7 680, which is trend line support connecting the recent lows on the 4-hour  chart, and there is immediate resistance above in the $8 122 – $8 219 ($10 822 – $10 951 CAD) resistance range. This is between the 0.5 – 0.618 Fibonacci retracement range of the recent rise from $7 714 to $8 531 ($10 279 – $11 368 CAD), where the 4-hour 50-bar simple moving average is aligned.

Above this level, there is major resistance of the 4-hour chart between $8 438 and $8 600 ($11 244 – $11 460 CAD). This is between horizontal resistance aligned with the 0.886 Fibonacci retracement level of the recent rise from $7 714 to $8 531 ($10 279 – $11 368 CAD), and the 4-hour 100-bar simple moving average, which is also aligned with horizontal resistance.

Over the short term, bitcoin is bullish above $8 250 ($10 993 CAD) and bearish below $7 700 ($10 261 CAD). Over the mid-term, bitcoin is bullish above $8 600 ($11 460 CAD), and bearish below $7 462 ($9 943 CAD), and over the longer term, bitcoin is bullish above $9 713 ($12 942 CAD) and bearish below $6 700 ($8 927 CAD).

 

 


Photo of Author Chris Colin
Chris Colin
Chris is a Crypto Trader / Crony / Degenerate Bitcoin Addict, and Technical Analyst. Chris has a bachelors degree in Economics from Rhodes University. He is a cryptocurrency investor and enthusiast, and has a passion for analyzing the crypto space.
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