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Technical Analysis

Weekly Bitcoin Technical Analysis September 3rd, 2019

Photo of Author Chris Colin
September 3, 2019
Chris Colin
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Bitcoin (BTC/USD) has climbed back above both the 50-hour and the 100-hour simple moving averages (MA50 and MA100) during the early Asian trading session, reaching $9 832 ($13 093 CAD) on Bitstamp shortly after the weekly close, and showing some redemption after a lacklustre monthly close for August, a choppy month which many traders will be happy to see come to an end. 

 

The short-term bullish bias was validated on the hourly chart on Monday midday (EDT) when MA50 crossed MA100 to the upside, resulting in a surge in price above both moving averages, although price fell just short of the hourly MA200, 4-hourly MA50 and $9 867 ($13 142 CAD) resistance level.  

 

The $9 386 ($12 502 CAD) major horizontal support held strong last week after being tested twice on 29 August, with price wicking slightly below this level, but with hourly candle closes above, and BTC has been in a short-term uptrend ever since.

 

The next major short-term resistance level to watch is the 1.382 Fibonacci extension level ($9 944) ($13 244 CAD) of this recent impulse from $9 538 to $9 832 ($12 704 – $13 096 CAD), which is also perfectly aligned with the 0.382 Fibonacci retracement level of the overall correction from $10 955 ($14 593 CAD) to the $9 320 ($12 414 CAD) swing low.

 

Until BTC breaks and closes above $10 013 ($13 337 CAD) on the hourly chart (1.618 Fibonacci extension of this recent impulse), this surge is most probably a short-term relief rally before a resumption of the downtrend, and another retest of that $9 386 ($12 498 CAD) major horizontal support could potentially ensue.

 

If BTC is able to close above $10 013 ($13 337 CAD) on the hourly chart, the next major level of resistance would be horizontal resistance and the 0.5 retracement level ($10 137) ($13 501 CAD) of the larger correction from $10 955 ($14 593 CAD), followed by the 2.618 Fibonnaci extension level ($10 306) ($13 726 CAD) of this recent impulse, which is aligned with the 0.618 Fibonacci retracement level ($10 330) ($13 758 CAD) of the larger correction from $10 955 ($14 593 CAD). Above this level, BTC has major horizontal resistance at $10 450 ($13 915 CAD), which has been the upper range for most of  the second half of August.

Looking at the 4-hour chart, trading volume has been declining over the few days leading up to the monthly and weekly closes, with buying volume breaking out of a wedge apex with this recent surge to $9 832 ($13 093 CAD), albeit with a weak volume spike.

 

OBV (On-Balance-Volume – which uses volume flow to predict price), has been printing bullish divergence on the 4H, with price printing lower lows between 14 to 29 August, but with OBV printing higher lows. This does give credence to a break above $10 013 ($13 343 CAD), with upside potential of between the upper range of $10 450 ($13 915 CAD) and $10 550 ($14 051 CAD) which is aligned with MA200 on the 4 hour, although price still has to contend with that $9 944 ($13 244 CAD) resistance and MA100 on the 4 hour, around  $10 100 ($13 454 CAD), before any bullish continuation can be confirmed over the short-term. 

 

ADX/DI (trend strength / trend direction) is also close to a bullish cross between +DI and -DI on the 4 hour, and bearish trend strength has been declining, now back below the 25 level, which probably means that BTC is fast approaching a short-term bullish flip if +DI can cross back above -DI.

 

 

On the daily chart, trading volume has been flat and MA50 has been gradually converging with MA100. 

 

If BTC can regain the 0.382 retracement level ($9 944) ($13 244 CAD) of the recent correction from $10 955 ($14 593 CAD), BTC will probably run into significant resistance in the form of MA100 on the daily, which is aligned with the 0.5 Fibonacci retracement level  ($10 137) ($13 501 CAD) of the recent correction from $10 955 ($14 593 CAD), and MA50 which is gradually aligning with the upper range of $10 450- $10 550 ($13 915 – $14 051 CAD).

 

If BTC breaks down from these higher resistance levels, and unsuccessfully retests the major $9 386 ($12 509 CAD) major horizontal support, there will be major horizontal support between $8 300 – $8 500 ($11 054 – $11 321 CAD), which is also the 0.5 Fibonacci level of the entire move from $3 122 to $13 880 ($4 158 – $18 486 CAD). 

 

RSI (Relative Strength Index) is still below centerpoint on the daily chart, and ADX/DI is still bearish, with -DI above +DI,  and with bearish trend gaining strength, although not yet above the 25 level, which is needed for confirmation of bearish bias continuation on the higher time frame. 

 

Until there is a death-cross between MA50 and MA100 to the downside, and significant strength of bearish trend, the bias still has potential to switch to bullish from these levels.

 

RSI is also fast approaching the apex of a larger bullish wedge, and if RSI can break above that wedge resistance to the upside, this could be the start of another uptrend on the daily chart, especially if RSI is able to regain the centerpoint resistance level.

On the weekly chart, BTC managed to close right at the 0.382 Fibonacci retracement level ($9 770) ($13 012 CAD) of the entire move from $3122 to $13 880 ($4 158 – $18 486 CAD). A weekly close above the prior high at $10 955 ($14 593 CAD), and the larger trend line resistance from $13 880 ($18 486 CAD), would confirm a continuation of the next impulse phase on the weekly chart, and could potentially result in new yearly highs. 

 

There will also be significant resistance between the 0.5 to 0.618 retracement levels ($10 822 – $11 177) ($14 415 – $14 888 CAD) of the recent corrective move from $12 325 to $9 320 ($16 417 – $12 416 CAD). 

 

Not much has changed in terms of the bullish bias on the weekly time frame, with ADX/DI still leaning bullish. Although the strength of this trend has been declining, it still is well above the 25 level at 52, so the bullish trend on weekly, and for the longer term, is still very much in tact.

 

A continuation of this corrective phase below $8 300 ($11 057 CAD) could potentially have BTC retesting the weekly 100-simple moving average (MA100), which is aligned with major horizontal support between $7 600 to $7 800 ($10 125 – $10 391 CAD).

 

The bearish scenario would be a daily close below $9 386 ($12 504 CAD), although with a potential bottom between $8 300 – $8 500 ($11 054 – $11 321 CAD), and the bullish scenario will be a daily close above $10 950 ($14 589 CAD) for a continuation towards new yearly highs.

DISCLAIMER:  The analysis provided in this article is for educational purposes and should not be considered an investment recommendation, All examples and analysis used are for illustration purposes only. All analysis is of the personal opinion of the technical analysis writer. 

 

 


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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