Bitcoin Breaks Through Support
- Continued struggles with cryptocurrency
- Bitcoin breaks major support during the week
- Signs we are going much lower
Bitcoin markets broke down during the trading session on Friday, slicing through an area that had been watched closely by market participants. This is a bad sign going into the weekend, as Bitcoin has completely wiped out the impulsive move that happened after the Chinese announced they were going to do massive research on blockchain technology. As traders don’t have too many ways to play the blockchain situation, Bitcoin was the beneficiary of that announcement.
Technical analysis
BTC/USD chart
The $7400 level was crucial, as it was the scene of where the market bounced from after China’s announcement that it was going to invest heavily in blockchain technology research. The digital currency had seen a huge surge in price, watching Bitcoin breaking above the $10,000 level before rolling over again. It moved sideways, then broke down to wipe out all of those gains as of midday on Friday.
Looking at the top part of the chart, there was an ascending triangle that kicked off at the end of September. The initial surge from the Chinese announcement had retested that bottom and has failed since. The measured move from the descending triangle suggests that the market could go as low as $4800. At this point, there is a longer-term push towards that area, as Bitcoin simply cannot pick up much in the way of volume other than when it sells off.
The play going forward
The play going forward in the Bitcoin market is to simply sell every time it shows signs of exhaustion after a short-term rally. Longer-term traders may hold short for a bigger move, but Bitcoin does tend to get erratic at times. Therefore, it’s safer to simply play the trend and take advantage of “value” in the US dollar or any other currency you are trading against Bitcoin when it appears.
It’s very likely that this market will continue to be very noisy, but it’s obvious that it is very negative in general. Even in a world where central banks around the world are continuing to widen and loosen monetary policy, Bitcoin can’t pick up its feet.
Now that we have made a “lower low”, it’s a market that is primed to go much lower. At this point, the market would need to break back above the 50-day EMA to look interesting from the long side.