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Technical Analysis

Weekly Bitcoin Technical Analysis September 23rd, 2019

Photo of Author Chris Colin
September 23, 2019
Chris Colin
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Bitcoin (BTC/USD) reached an exciting milestone on Monday 19:55 (EST), with Bakkt launching the very much-anticipated bitcoin futures trading on the Intercontinental Exchange (ICE), the first of it’s kind to offer physically-settled bitcoin futures trading after receiving US regulatory approval from the Commodity Futures Trading Commission.

It’s easy to get caught up in all the institutional hype, but BTC is starting to look dicey here with funding currently paying shorts, and with this being a typical ‘buy the rumour, sell the news’ event, there is a strong possibility that the upside is limited before BTC retests the trendline connecting the lows of this corrective phase as support, somewhere between $9 505 ($12 615 CAD) and $9 600 ($12 742 CAD) ($9 505 is the 0.886 Fibonacci retracement level from the prior $10 949 ($14 532 CAD) peak.

Last week, BTC continued the downward corrective wave from the prior $10 949 ($14 532 CAD) peak, completing a 0.786 Fibonacci retracement ($9 668) ($12 858 CAD) of that move, finding support and printing a higher low at the $9 600 ($12 742 CAD) horizontal support level, before quickly recovering and regaining $10 100 ($13 405 CAD) as support on the next 4-hour candle close.

Much like now, however, BTC had converging simple moving averages (MA50, MA100 and MA200) on the 4-hour chart acting as major resistance between $10 200 and $10 320 ($13 538 – $13 698 CAD) (currently between $10 130 and $10 220 or $13 445 – $13 565 CAD), and BTC was only able to wick above MA100 on the 4-hour chart (100 bar simple moving average) to $10 380 ($13 777 CAD), before there was a strong reversal in short-term trend on the ADX/DI indicator (trend strength/trend direction), with -DI crossing +DI to the downside and ADX showing strong trend strength above the 25 level.

BTC then experienced a full 0.618 Fibonacci retracement of that move down to yesterday’s low of $9 842 ($13 062 CAD) before recovering, but was then unable to regain the $10 100 ($13 405 CAD) area of resistance, printing a daily high of $10 093 ($13 396 CAD) yesterday before experiencing a 0.618 Fibonacci retracement ($9 938 or $13 190 CAD) of that move, and finding support at a low of $9 925 ($13 173 CAD).

At the time of writing, BTC is currently still battling the $10k resistance level ($13 273 CAD) with bearish ADX (trend strength) slowly picking up again, albeit with ADX below 25 now so not enough strength to confirm  a continuation of bearish trend for the short term.

Volume has been gradually dropping on the 4-hour chart since the $9 600 ($12 742) low, since the recent $10 949 ($14 532 CAD) peak on the daily chart, and since the $13 880 ($18 421 CAD) start of the corrective phase on the weekly chart, indicating an unsettled consolidation period and lack of confidence as BTC trades within a sideways range with uncertain bias within a larger triangle.

A move to the upside over the short-term, above the larger corrective trendline resistance, will likely result in BTC reaching major resistance at the converging 4-hour moving averages (MA50, MA100, MA200) between $10 130 ($13 444 CAD) and $10 200 ($13 537 CAD), before potentially resuming the short-term downtrend. 

A 4-hour candle close above these 4 hour moving averages, and larger trend line resistance, will likely lead to further upside over the short term, with major resistance sitting between the $10 400 – $10 600 ($13 802 – $14 067 CAD) range and followed by the $10 800 – $10 949 ($14 333 – $14 530 CAD) major resistance range.

A move to the downside will likely see BTC retesting $9 770 ($12 966 CAD) (major horizontal support and 0.786 Fibonacci retracement level of the move from $9 600 to $10 380 ($14 067 – $13 777 CAD). Below this, BTC has major trend line support, somewhere between $9 505 ($12 614 CAD) (0.886 Fibonacci retracement level from the prior $10 949 peak) and the $9 600 ($14 067 CAD) horizontal support. 

The final level of support in order for the bullish bias to remain in tact, will be the $9 386 ($12 456 CAD) critical horizontal support which has held throughout the corrective phase.

On the daily chart, BTC experienced a strong candle close slightly above the $10k ($13 273 CAD) support level, after recovering from the $9 842 ($13 063 CAD) low yesterday, but has been unable, as of yet, to close above the larger trendline resistance connecting the peaks of the corrective phase from $13 880 ($18 422 CAD).


The 50-day simple moving average (MA50) crossed MA100 to the downside last week, which saw BTC drop from $10 380 ($13 777 CAD) to yesterday’s $9 842 ($13 063 CAD) low in a space of 3 days. It is still unclear, however, whether MA50 will cross back above MA100, which will be more indicative of range-bound consolidation.

Trend direction is still unclear on the daily chart, with -DI currently above +DI, indicating bearish trend direction, however ADX is still well-below the 25 level, showing lack of real trend strength, and -DI/+DI have been criss-crossing between bullish and bearish since July, indicating consolidation and uncertainty within the larger corrective triangle.

RSI is currently slightly below centerpoint on the daily chart, which is bearish, however it is still too early to confirm a resumption of bearish trend from this level, considering the lack of trend direction and strength on the ADX/DI indicator.

If BTC continues the bearish trend on the daily chart, and closes below the critical $9 386 ($12 456 CAD) support, there should be major support between $8 500 – $8 280 ($11 282 – $10 990 CAD). $8 280 is major horizontal support which is aligned with the 200-day simple moving average (MA200), and $8 500 ($11 282 CAD), is the 50% retracement level of the overall move from $3 122 to $13 880 ($4 143 – $18 422 CAD).

If BTC continues the rise from the recent $9 320 ($12 370 CAD) low on the daily chart, breaking above larger trend line resistance, there will be considerable resistance at the converged 50 and 100-day simple moving averages between $10 450 and $10 600 ($13 868 – $14 067 CAD).

Above this resistance range, there will be major resistance between $10 822 and $11 177 ($14 362 – $14 833 CAD), which is the 0.5 – 0.618 Fibonacci retracement level of the larger recent corrective wave from $12 325 to $9 320 ($16 357 – $12 370 CAD). 

A 0.618 Fibonacci retracement could take BTC between $11 177 and $11 577 ($14 362 – $15 364 CAD). $11 577 ($14 362 CAD) would be a retest of the 0.214 Fibonacci retracement level of the overall move from $3 122 to $13 880) ($4 143 – $18 422 CAD).

The weekly chart saw another close below the larger trendline resistance and which coincidentally(?) coincided with the Bakkt bitcoin futures launch, printing a second red weekly candle close slightly above the $10k ($13 273 CAD) level.

BTC is currently sitting right at the larger trend line resistance and it is unclear, as of yet, whether we will see a weekly close above this level, or whether the bearish case will prevail for BTC to retest the critical $9 386 ($12 456 CAD) level of support, which has held throughout the corrective phase.

The weekly bullish trend is still in tact, with RSI above centerpoint and with +DI above -DI. ADX is still well-above the 25 level showing strong trend strength, although gradually declining as BTC approaches the triangle apex.

A break above the larger trendline resistance and a weekly close above $12 325 ($16 357 CAD) for a higher weekly high, will more than likely mean that the corrective phase is over and should potentially result in a continuation of the weekly uptrend towards new yearly highs.

If $9 386 ($12 456 CAD) doesn’t hold on a potential retest, there will be support between $8 280 and $8 500 ($10 989 – $11 281 CAD) (200-day moving average and the 50% retracement level of the overall move from $3 122 to $13 880 or $4 143 – $18 422 CAD).

Below this level, BTC has major support between $7 600 – $7 800 ($10 086 – $10 351 CAD), an area between major horizontal support and the 100-week simple moving average, followed by $6 700 to $7 231 ($8 891 – $9 596 CAD), which is an area of major support between the 50-week simple moving average (MA50) and the 0.618 Fibonacci retracement level of the overall move from $3 122 to $13 880 ($4 143 – $18 422 CAD).

On the weekly chart, bitcoin is bullish above the $11 577 – $12 325 ($15 364 – $16 357 CAD) resistance range. On the daily chart, bitcoin is bullish above the $10 822 – $10 950 ($14 362 – $14 532 CAD) resistance range, and on the 4H chart, bitcoin is bullish above the $10 400 – $10 600 ($13 805 – $14 070 CAD) resistance range.

Bitcoin is bearish below the critical $9 386 ($12 456 CAD) level of support.

 


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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