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Bullish bitcoin prices have only one goal before the next week begins

May 22, 2020

The price of Bitcoin (BTC) rose 1.23% to $ 9,175 for the session today, after the $ 9,000 identifier was restored after it was briefly lost and hit a low of $ 8,800. Overall, the largest cryptocurrency by market cap has dropped 1% from Thursday’s level.

Ether (ETH), the second largest cryptocurrency, controls $ 200 and, at $ 204, represents a 2.69% recovery from yesterday’s lows of 191. XRP, the third largest by market cap, is at $ 0.20 and also rose 3.8% at the session of the day.

24 hour view of the cryptocurrency market. Source: Coin360

Bullish bitcoin prices have only one goal before the next week begins
Bullish bitcoin prices have only one goal before the next week begins

24 hour view of the cryptocurrency market. Source: Coin360

One month chart

A week before the end of May, Bitcoin’s monthly chart clearly shows that Bitcoin faces a long-term challenge, namely the $ 10,000 call. More specifically, you need to have a monthly closing price of ~ $ 9,300 that Bitcoin has escaped in the past 10 months and sets the tone for the current price movement. This is expected to happen in the next week.

BTC / USD 1-month chart. Source: TradingView

BTC / USD 1-month chart. Source: TradingView

One day chart

The 1-day chart for Bitcoin shows that current trading is still below the resistance and that Bitcoin has currently bottomed out at the macro level after hitting a bottom. This market structure has to change before Bitcoin can declare itself bullish with more confidence.

The high spot volume at USD 10,000 shows that there may be more external interest around this price point, which is positive for the bulls despite the temporarily high resistance of USD 9,300 which temporarily loses as support.

1-day chart of BTC / USD. Source: TradingView

1-day chart of BTC / USD. Source: trade view

After yesterday’s settlement, the graph shows a loss of momentum when the MACD is lower, indicating that the upside momentum is stalled and further consolidation may be required before proceeding. The MACD line is above the zero line, which means that the underlying trend has not yet become bearish.

The RSI is currently above 50, which is generally considered bullish and is likely to develop a small hidden bearish divergence. But clearly the trend is currently low and similar to before when there was a rejection at the $ 10,000 level.

1-day chart of BTC / USD. Source: TradingView

1-day chart of BTC / USD. Source: trade view

One hour chart

The 1-hour chart shows that the half drop from $ 9,000 was achieved with the support of a textbook on the movement’s 61.8% retracement, which started at $ 8,178 and peaked at $ 9,953.

The downtrend that brought Bitcoin to lows has now been broken. In the meantime, a so-called background pattern has formed for Adam and Eve that breaks off the open east coast and the last session of the week at CME, which can usually lead to a volatile afternoon.

MACD and RSI also imply that there is momentum to move forward in the lower timeframes. The Adam and Eve Fund’s target is around $ 9,500, which is also 61.8% of the downtrend. So there is reason to believe that there is an urge to retest at least $ 9,000 over the weekend. If the low for Bitcoin is not held here, this would likely result in a retest of the $ 8,200 low, which is also the 20-week moving average.

BTC / USD 1 hour chart. Source: TradingView

BTC / USD 1 hour chart. Source: trade view

3 scenarios for the price of Bitcoin

Due to the nature of the market, which currently has a fairly defined market structure, three scenarios can be proposed that can serve as a framework for what can occur beyond the lowest time frame.

Chart of the 4-hour BTC / USD pair. Source: TradingView

Chart of the 4-hour BTC / USD pair. Source: TradingView

Restore superior temporary resistance

If Bitcoin can quickly regain the temporary upper resistance at $ 9,300 and close the month, there is a possibility that there is an ascending triangle that also supports the strength of the train.

This scenario implies that the sale was a nifty attempt to keep prices below $ 10,000 to allow accumulation before an upward move. This is somewhat unusual given the pre-sale interest at these prices and the long time that has accumulated below.

However, the change in the economic climate and the comments from traditional financial figures such as Paul Tudor Jones can point to a change in sentiment. In this case, a relatively quick move towards $ 11.5 billion could be expected as the liquidity on the sell side is exhausted and is only available in the book above $ 10,000.

20 weeks moving average test – broken

If Bitcoin cannot claim the above values, the possible inevitable breakdown is to retest the lows in May and the 20-week MA, which is currently $ 8,160. This is usually the line in the sand between the highest continuation and a more significant recession in decline. If support is found here, a slower move could be expected to retest $ 10,000, but it would be the first time that the mid-range $ 8,000 acted as support and would be a very bullish signal.

20 week moving average test – rejected

An interruption in the 20-week MA was and is an indication of lower prices and a longer-term correction. This would also suggest that there is a diamond-shaped hedge target that would have a target of around $ 6,500. This is also the critical middle class in which Bitcoin has spent most of the years.

This can be seen by many bulls at this stage as an illusion and prevents a more fundamental breakdown. While these scenarios are useful for planning ahead, the main focus for traders next week is on hitting a higher high at the end of the month.