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Technical Analysis

Weekly Bitcoin Technical Analysis October 15th, 2019

Photo of Author Chris Colin
October 15, 2019
Chris Colin
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Bitcoin (BTC/USD) was battling major horizontal resistance between $8 450 ($11 162 CAD) and $8 520 ($11 254 CAD) at the time of the weekly close, only really managing a 0.382 Fibonacci retracement of the drop from $8 820 to $8 222 ($11 650 – $10 860 CAD) on the 4-hour chart, before depreciating sharply, breaking and wicking below both the 4-hour 50-bar simple moving average (MA50) and MA100 support levels, to establish a short-term swing low at the $8 132 ($10 743 CAD) horizontal support, before rebounding just as sharply, in time for a 4-hour close back above MA50 at $8 280 ($10 935 CAD).

The wick to $8 132 ($10 743 CAD) is also a 0.618 Fibonacci retracement of the prior impulse from $7 763 to $8 820 ($10 255 to $11 650 CAD), with major support offered being by the golden ratio.

BTC is now looking bullish over the short term, printing bullish divergence on the 4-hour Money Flow Index (MFI). This is combined with a successful retest of the 4-hour MA50, after a bullish cross between MA50 and MA100, and a weakening bearish trend on the 4-hour ADX/DI indicator (trend strength/trend direction), all of which provides a confluence of short-term bullish sentiment.

Over the short-term, BTC again has major horizontal resistance in the $8 450 to $8 520 ($11 162 – $11 254 CAD) range, followed by a Fibonacci cluster of resistance between $8 593 and $8 751 ($11 350 – $11 558 CAD), which would also be a retest of MA200 on the daily chart, as well as between a major horizontal resistance level and the 0.382 Fibonacci retracement level ($8 744) ($11 549 CAD) of the larger drop from $10 380 to $7 714 ($13 710 – $10 189 CAD).

A 4-hour close above $8 744 ($11 549 CAD), could potentially lead to a retest of the 4-hour 200-bar simple moving average (MA200), currently sitting at major horizontal resistance around $9 000 ($11 888 CAD), and close to the 50% retracement mark ($8 989 / $11 871 CAD) of the larger drop from $10 380 to $7 714 ($13 710 – $10 189 CAD).

This would also be a 1.214 Fibonacci extension ($9 046) ($11 949 CAD) of the prior upswing from $7 763 to $8 820 ($10 255 to $11 650 CAD), and a 0.382 Fibonacci retracement ($8 950) ($11 824 CAD) of the drop from $10 949 to $7 714 ($14 465 to $10 189 CAD) on the daily chart.

Looking at the daily chart,  BTC is yet to close above the daily MA200 resistance level after already unsuccessfully retesting this level twice since the drop to $7 714, and trading volume has been dropping off since the most recent retest.

ADX/DI (trend strength / trend direction) is still reflecting a strong bearish trend over the mid-term, with -DI still well above +DI, ADX currently at a strong 52.50, and Relative Strength Index (RSI) still below centerpoint, indicating the downtrend is still in tact on the daily chart.

There is also hidden bearish divergence on the daily Money Flow Index (MFI), with price printing a lower high from $10 308 to $8 666 ($13 617 to $11 447 CAD) and MFI printing a higher high (this divergence could become extended if BTC is bullish over the short term), so any bullish price action could potentially be short-lived over the short-term and expecting daily MA200 to yet again potentially hold as major resistance.

If BTC does, however, manage to successfully close above the daily MA200 resistance level (currently sitting around $8 700 / $11 492 CAD), BTC could then go on to retest MA50 on the daily chart, currently at around $9 360 ($12 364 CAD), which also coincides with the prior corrective triangle’s critical horizontal support level which held throughout the corrective triangle before it eventually gave away with the drop below $8 000 ($10 568 CAD).

Above the $9 386 ($12 399 CAD) critical horizontal resistance level, BTC could potentially go on to a 0.618 Fibonacci retracement ($9 713) ($12 831 CAD) of the drop from $10 949 to $7 714 ($14 465 to $10 189 CAD), followed by a retest of the daily MA100 resistance level close to $10 000 ($13 209 CAD).

If BTC gets rejected from the daily MA200 resistance level, and drops below the 100-week simple moving average (MA100), which has held strong until now, and the recent $7 714 ($10 189 CAD) lows, there will be major horizontal support between $7 486 and $7 640 ($9 888 – $10 092 CAD), although I suspect that if BTC breaks below the recent lows, there will potentially be a downtrend continuation towards a cluster of Fibonacci support levels on the weekly chart between $7 100 and $7 300 ($9 378 – $9 642 CAD).

 

This would be a 0.618 Fibonacci retracement ($7 231) ($9 551 CAD) of the entire move from $3 122 to $13 880 ($4 124 – $18 334 CAD), and a 1.382 Fibonacci extension ($7 204) ($9 515 CAD) of the initial drop from $13 880 to $9 049 ($18 334 to $11 952 CAD), which also coincides with major horizontal support on the weekly chart.

 

Below this level, there is major support offered between $6 479 and $6 771 ($8 557 and $8 943 CAD). $6 479 ($8 557 CAD) is a 1.382 Fibonacci extension of the recent drop from $10 949 to $7 714 ($14 465 to $10 189 CAD), and $6 771 ($8 943 CAD)  is where MA50 on the weekly chart is currently sitting as support.

 

If that level does not hold, there is also major support between $5 715 ($7 548 CAD) (1.618 Fibonacci extension of the recent drop from $10 949 to $7 714 / $14 465 to $10 189 CAD) and $6 064 ($8 009 CAD) (which is a 1.618 Fibonacci extension of initial drop from $13 880 to $9 049 / $18 334 to $11 952 CAD). This was also the major support range of the 2018 descending triangle.

 

Bear in mind that although RSI is marginally below centerpoint, the weekly ADX/DI bullish trend is still in tact, with +DI still marginally above -DI. Bullish trend strength is still declining but is still holding above the 25 level, so if BTC can establish a major low while still acting within the larger bullish trend, BTC could still potentially go on to new yearly highs.

To summarize, BTC is bullish if there is a daily close above daily MA200 ($8 720 / $11 516 CAD) and bearish below the $7 714 ($10 189 CAD) recent lows.

 


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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