Bitcoin Continues to Mull 200-Day EMA

Anthony Gallagher
Anthony Gallagher

3 October 2019

Bitcoin/USD trading

  • Bitcoin continues to test 200-day EMA
  • Crypto continues to struggle
  • Not moving with central banks
  • Descending triangle broken

Bitcoin has broken down through a major descending triangle recently, breaking below the $9250 level. By doing so, it kicks off a very negative pattern that could send the market as low as $4800, but obviously there is a lot of work to get through to get to that level. That being said, the Bitcoin market has been decidedly bearish, or at least lackluster over the last couple of weeks, as cryptocurrency starts to fall out of favor again.

Technical analysis

The charts in this market look rather rough. The latest move obviously was very negative before the last couple of days started the consolidation that we are currently dealing with. The market is sitting on the 200-day EMA, which of course attracts a lot of attention from technical traders, as it is quite often used as the long-term indication of a trend. In other words, a lot of longer-term traders are starting to focus on whether or not we are still in an uptrend, or if we’re about to enter a downtrend.

The 50-day EMA above, shown in red, is currently at the $9720 level and tilting lower. This suggests that short-term traders will be looking to fade rallies as they occur, and especially at the first signs of exhaustion. Quite frankly, the market could tread water for a while, but it will make it an explosive move in one direction or the other. If the descending triangle from previous trading is to be believed, that move should be lower.

Bitcoin Technical Analysis

Bitcoin Technical Analysis

Bitcoin fundamentals

Quite a few people out there will focus on things like hash rate, network speed, and other such technical factors when it comes to the Bitcoin network. The biggest problem that Bitcoin has right now is that it simply isn’t being adopted by wealthier countries. Yes, there are parts of the world where Bitcoin is used frequently, but that normally involves either a very small economy or a place where capital controls are in effect. One example was China recently adding more capital controls to keep money within the country. As it was leaving, quite often it was leaving via Bitcoin. That move has been made, and since then we have seen Bitcoin take a bit of a hit.

The biggest problem that Bitcoin has right now is that it simply isn’t being adopted by wealthier countries

Beyond all of that, central banks around the world continue to ease monetary policy, yet crypto isn’t taking off. It isn’t moving with gold as it had been earlier in the cycle, showing that the traders are trying to get away from fiat to protect their wealth. Simply put, the whole “gold 2.0” scenario isn’t playing out.

The trigger

A potential trigger for a trade could be a break down below the range on Monday, as it would break the back of a hammer. That suggests that below the $7775, we will see sellers come in and continue to push this market lower. If the market breaks above the $8500 level, then the $9250 level will more than likely be tested again for potential resistance, as it was such reliable support for so long. At that point, signs of exhaustion will be sold into.

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