Bitcoin’s price struggled to maintain its position above $60,000 on Wednesday, following a brief uptick spurred by Federal Reserve Chair Jerome Powell’s speech at Jackson Hole.
Over the past three months, bitcoin has faced challenges, dropping more than 12% and failing to revisit its all-time high of nearly $74,000 reached earlier this year.
Analysts point to profit-taking by traders and seasonally low trading volumes as potential factors behind the decline. Despite the dip, interest in bitcoin remains strong, with continued inflows into U.S. spot bitcoin ETFs. However, concerns about the U.S. government potentially selling seized bitcoins might be adding downward pressure on prices.
The recent pullback could also indicate a stabilization after the initial surge driven by expectations of Federal Reserve interest rate cuts.
BTC/USD Daily Technical Analysis
Exponential Moving Averages (EMAs)
10-Period EMA: Positioned around 61,046.16, with the current price below this level, indicating short-term bearish momentum. The downward slope reflects recent selling pressure.
20-Period EMA: Positioned around 60,940.00, with the price also below this level, reinforcing the short-term bearish trend. The downward slope signals increasing bearish momentum.
50-Period EMA: Positioned around 61,575.91, confirming medium-term bearish momentum as the price remains below this level. The downward slope suggests that the medium-term trend favors the bears.
200-Period EMA: Positioned around 59,613.08, with the price hovering near this level, suggesting that the long-term trend is being tested. The relatively flat slope indicates a potential support area.
Keltner Channels (KC):
Upper Band: Positioned around 66,434.81, with the price significantly below this level, reflecting bearish price action that is closer to the middle and lower bands.
Middle Line (20-Period EMA): Positioned around 60,940.00, with the price currently below this line, indicating a bearish bias.
Lower Band: Positioned around 55,445.19, with the price nearer to the middle of the channel, suggesting potential room for further decline toward the lower band if bearish momentum persists.
MACD (Moving Average Convergence/Divergence)
The MACD line (2.47) is above the signal line (-161.27), and both are positioned above the zero line. The histogram is positive but declining, indicating that bullish momentum is weakening.
Key Insights
Price Movement
Let's examine bitcoin's (BTCUSD) price movement since its last swing high at the end of July.
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End of July Swing High: The price peaked at around $70,000 at the end of July.
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Initial Pullback: After this high, the price retraced sharply to about $65,000, forming a notable red candle.
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Consolidation: Following the initial decline, the price consolidated between roughly $65,000 and $68,000 for several days, characterized by smaller-bodied candles.
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Renewed Selling Pressure: In early August, selling pressure increased, causing the price to fall below the consolidation range to around $62,000.
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Attempted Bounce: A brief recovery saw the price rise to approximately $65,000, but this bounce was quickly reversed.
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Sharp Decline: Mid-August experienced a dramatic drop, with the price falling from around $65,000 to a low of about $55,000 in a single day, marked by a long red candle with a significant lower wick.
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Volatile Recovery: Following this decline, a strong bounce brought the price back to around $60,000-$61,000 over the next few days.
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Resistance at Previous Support: The $60,000-$62,000 range, once a support level, has now turned into resistance, with the price struggling to break above it convincingly.
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Range-Bound Trading: Bitcoin entered a range-bound phase, fluctuating between roughly $58,000 and $62,000.
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Failed Breakout Attempt: There was a brief attempt to surpass $62,000, but it was quickly rejected.
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Recent Downward Pressure: Recent price action shows renewed downward pressure, with the price moving back towards the lower end of the range, around $59,000.
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Lower Highs: Each recovery attempt has resulted in a lower high compared to the previous peak, signaling weakening bullish momentum.
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Higher Lows: Despite the overall downtrend from the July high, the price has been forming slightly higher lows since mid-August, potentially indicating a descending triangle pattern.
In summary, since the end of July’s swing high, the price action has been largely bearish, marked by a sequence of lower highs and heightened volatility.
The market has shifted from a clear uptrend to a more ambiguous, range-bound phase with a slight downward bias. Currently, the price is consolidating within a tightening range, indicating the potential for a significant breakout in either direction once this range is breached.
60,000: Key psychological level, near the 20 EMA.
65,000: Recent resistance level.
55,000: Significant support level, aligning with the lower Keltner Channel.
Support and Resistance Levels
Major Resistance: $65,000-$66,000 (recent highs and upper Keltner Channel).
Immediate Resistance: $61,000-$62,000 (20 and 50 EMAs).
Immediate Support: Around $58,000-$59,000 (recent lows and 200 EMA).
Strong Support: $55,000-$56,000 range (lower Keltner Channel and previous lows).
Potential Trade Scenarios
Bullish Bias:
- Consideration Point: Enter a long position if the price holds support at the 200-period EMA and shows signs of reversal, such as a bullish MACD divergence or a strong bullish candlestick pattern.
- Invalidation Point: Set a stop-loss just below the 200-period EMA, around $59,000, to manage risk.
- Potential Target: Aim for a move towards the middle Keltner Channel line at $60,940 or higher if a reversal takes place.
Rationale: The 200-period EMA may serve as a robust support level. Any indications of a bullish reversal could signal a buying opportunity, especially if broader market sentiment turns positive.
Bearish Bias:
- Consideration Point: Enter a short position if the price drops below the 200-period EMA at $59,613 or forms a bearish continuation pattern on lower timeframes. Another entry point could be a rejection at the 10-period EMA.
- Invalidation Point: Set a stop-loss above the 20-period EMA, around $61,000, to manage risk.
- Potential Target: Aim for a move towards the lower Keltner Channel band at $55,445 if the downtrend persists.
Rationale: The strong bearish momentum, supported by the MACD and the price's position below the middle Keltner Channel line and all key EMAs, indicates further downside potential. The 200-period EMA is a crucial level; a break below it could trigger a significant sell-off towards the lower Keltner Channel band.
TAOTD Summary:
Bitcoin is currently exhibiting a mixed trend characterized by recent volatility and bearish short-term momentum.
- Current Position: The price is in a downtrend and is testing the 200-period EMA for support. Bearish momentum is confirmed by the MACD and the price’s position below all key EMAs and the middle Keltner Channel line.
- Trend: The overall trend remains bearish, with the price below the 10-period, 20-period, and 50-period EMAs. The 200-period EMA is crucial and may dictate the next major price movement.
- Support/Resistance: Immediate support is at 59,613 (200-period EMA), while resistance levels are at 61,046 (10-period EMA) and 60,940 (middle Keltner Channel line).
- Momentum: The MACD shows strong bearish momentum, suggesting potential for further downside if the price falls below the 200-period EMA.
Bitcoin is currently in a consolidation phase, indicating it is at a critical juncture. The long-term uptrend is being tested by short-term bearish pressure.
The recent price action reflects a struggle between buyers and sellers, with a short-term bearish bias evident in recent movements. The market’s indecision is highlighted by the tight clustering of EMAs and its position within the Keltner Channel. Key resistance is around the 60,000-61,000 level, while support is found at 57,800-58,000.
The inability to break higher and the recent dip below the 20-day EMA suggest that bears may have a slight edge in the short term, but the overall picture remains uncertain.
Key Point: Watch the 200-period EMA closely. The interaction of the price with this level and the resolution of the current consolidation phase will likely dictate the next major trend direction. A break below the 200-period EMA could signal further downside towards the lower Keltner Channel band, while a reversal at this level could present a buying opportunity.
