After consequent “green” days in the chart, the market took another minor blow that led the price down to $36,000. This blowout was somehow expected as there is a lack of bullish momentum in the market that could evolve into a better situation. Let’s explean the situation int this Bitcoin Price Analysis!
After hitting the $36,000 point, the Bitcoin price moved up again, touching the $38,000 and confirming that the market has dived into the consolidation phase. This consolidation phase might last for months if there is no ground for a bullish or a bearish change in the market development.
Of course, a bullish turn would be marked from a sharp movement that will break the resistance level at $40,000 and establish a higher support level above it. The higher support levels have been formed during the previous ascending and descending periods, so we can have a clear view of what the next bullish phase could look like.
On the other hand, a bearish turn would start with more action between the $30,000 and $35,000 zone. A sudden drop in the Bitcoin price remains an unlikely event as the market depth remains huge at those levels. The reason behind it is the institutional investors’ positions, which have been placed above the $29,000 level, confirming a strong barrier around this level.
It was Microstrategy’s move to start acquiring Bitcoins around those levels that formed a solid support zone, resisting a bearish situation like this one. Although there are few possibilities for an extended market correction, there is a chance for a flash crash over the next few days.
The flash crash scenario would indicate a quick drop for the Bitcoin price around $30,000, and the following reaction would bring the price back to the $35,000 consolidation point. This could a great chance for more and more buyers to increase their positions, waiting for the next recovery.
As long as the consolidation zone continues to exist, the more powerful the next trend will become. In this period, we should take a look into more indicators and the stories also that will enable us to find the optimal timing when the price recovery will start to happen.
The moving averages have started to move closer to each other, indicating that there is a chance in the market for a quick uptrend, based on momentum trading. We should be very careful on that, as during a consolidation phase, multiple moving averages crosses might happen, with no clear indication that there would be a change in the market trend. Thus, we have to wait to see if there would be another indication for a change in the market direction.
The trading volumes have returned to normal levels, showing that the market is moving into the next phase with slow and steady steps.
The positive reaction of the market during the last week made many investors believe that the market would touch the $40,000 point before starting to collapse again at lower levels. This expectation was not fulfilled as many investors were trying to capitalize on their gains as the market was uptrending.
As we can see in this Bitcoin Price Analysis diagram below, the correction lasted a single day, showing that some investors tried to capitalize on the short-term profits before the market runs further. This move was not left without response as the next two days were also “green” and lift the market to higher levels than before.
The day trading perspective in the market remains as lucrative as before, even slightly bullish at this moment. The fact that the “return point” was uplifted around $37,000, indicates that the market will try to evolve its bullish trend, step by step.
In the current situation, the market will still grow until the $39,000 probably and if there is no resistance to that point, we expect another minor correction even in terms of hours. This minor move is possible due to the consolidation momentum, which makes the market less flexible to single moves from institutional investors.
As we have highlighted several times in these Bitcoin Price Analysises, the current consolidation phase could be profitable for day traders as patterns are emerging all the time at certain levels. The opportunities from $35,000 to $38,000 and back, and from $36,000 to $39,000 and back could bring a nice boost in the short-term, waiting for the next trend to get established.
MACD (Moving Average Convergence Divergence) index has remained in the “green” area, showing that the market has sustained a positive reaction in the current situation, which should be developed more if the price would evolve to the next levels. We should highlight that there was only one heavy “red” day during the last consolidation period. This means that the market has sustained some useful momentum for future reference.
The RSI index (Relative Strength Index) moved to value = 40, indicating that the market has started the recovery process that would be marked up, once RSI reaches value = 50. From that point and on, we should open another discussion regarding market dynamics and how they affect price formation.
In this Bitcoin Price Analysis you have seen the Bitcoin market has continued its ups and downs in the short-term action, proving that there are multiple opportunities for traders to make money. Long-term holders are trying to get a better positioning over the market situation, buying more bitcoins and driving the price to slightly higher levels.
Day traders can use the pattern that we describe in the paragraphs above and start to exploit more and more opportunities as long as the consolidation phase continues to thrive.
Read our previous Bitcoin Price Analysises here!
Don’t worry, we hate spam too
one weekly digest, just the important stuff.
