Bitcoin Maintains Near-term Bearish Momentum

Bitcoin Maintains Near-term Bearish Momentum

Since breaking below a descending triangle, bitcoin has been bearish. The daily chart shows that the market looks poised to fall toward the 2014-low at 340. The strong volume accompanying the recent dip also encourages this outlook. Before the low on the year, there is a key price range in the 420-440 area. This was an average price of a a consolidation between April and May. While the daily RSI dips below 30 into oversold territory, we can expect some consolidation here before price continues to descend toward the 340 low on the year.

Bitcoin Daily Chart 8/19
bitcoin 8/19 daily chart

(click to enlarge)

While price approaches the 420-440 area, we are seeing a bullish divergence between price and the 4H RSI reading. This suggests some consolidation ahead, although you can argue that the 8/18 price action was already consolidation, and thus the market is ready for bearish continuation. We can also expect resistance if price edges up instead toward 500, which is also likely going to be held by a falling trendline from last week.

If we do see this bullish correction, we should monitor the RSI in the 4H chart as it approaches 60. Look for it to stall and if it does, look for a dip to signal bearish continuation.

Bitcoin 4H Chart 8/19
bitcoin 8/19 4h chart

(click to enlarge)

When you go down to the 1H chart, you can see the 1H RSI at 60 turning down, which is a sign of bearish continuation. It shows that the near-term bearish momentum is maintained.

Price also respected the 100-hour SMA, and came back below the 50-hour SMA, Perhaps, the market is already ready for the bearish continuation, which has downside risk not only to the current low at 442, but also the 420 support pivot, then the 340 low on the year. If the 1H RSI pops up above 60, look for it to be above 70, while the 4H RSI is at 60, for the next possible attempt at bearish correction.

Bitcoin 1H chart 8/19
bitcoin 1h chart 8/19

(click to enlarge)

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