Bear Cross on Key Indicator Could Push Bitcoin Price to $7,300

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At the moment, not too much is happening with Bitcoin’s (BTC) price action. The price continues to drop and a series of lower highs occur even as bullish news hits the press week after week. The news of Bakkt Bitcoin futures trading volume increasing by 796% failed to positively impact Bitcoin price and Fidelity Investments’ announcement that it has launched crypto custodial services also did little for the market. 

Daily crypto market data. Source: Coin360

The general sentiment amongst Bitcoin traders seems relatively unenthusiastic and many traders view Bitcoin’s current price action as an opportunity for accumulation at $7,800 and below. 

This conclusion is supported by the Crypto Fear and Greed Index (CFGI) which currently shows investor’s fear level as being flat throughout the month of October. If the $7,800 support fails to hold and Bitcoin drops to $7,300 and below, then one would expect the fear index to rise. 

Crypto Fear & Greed Index Source: Alternative.me

As Bitcoin’s price gradually sinks lower, traders appear to have turned their appetites elsewhere. Earlier this week crypto market analyst Crypto Michael tweeted that altcoins have quietly posted amazing gains since bottoming in September. 

Below are the top altcoin performers compared against Bitcoin: 

– ETH +36%

– XRP +50%

– XLM +43%

– ZRX +170%

– LINK +98%

With that said, Bitcoin is again approaching an important point and it seems likely that volatility could increase over the next 24 to 48-hours. Let’s take a closer look at the charts to see where Bitcoin stands. 

Bitcoin is bearish on nearly all time frames

BTC USD daily chart. Source: TradingView

As shown by the daily chart, Bitcoin price is approaching the double bottom at $7,775 and $7,714. As mentioned previously, a drop below these levels could see the price slink down to $7,300. 

The pattern of lower highs could eventually give way to lower lows as was demonstrated in September when Bitcoin’s price was in the low $9,000s. Multiple retests of supports tend to give way to downside breaks and this could be weighing on investors’ appetite for making purchases around the $7,800 area. 

One will also notice that the 200-day moving average has flattened and Bitcoin price continues to peel away from the indicator which many traders describe as being crucial. 

BTC USD weekly chart. Source: TradingView

On the weekly time frame the 111-day moving average lines up with the 50% Fibonacci Retracement level at $6,600 and the volume profile visible range (VPVR) also shows an increase in purchasing volume at this price.

Bitcoin needs to overcome $8,450 followed by last week’s high at $8,835 to turn the ship around. A drop below $7,300 could drop Bitcoin as low as $6,720 which aligns with the 111-day moving average and a high volume node on the VPVR. 

The weekly Stoch RSI still shows a bull cross which is a slightly encouraging sign.

Longer-term moving average provide insight

Earlier this week market analyst Philip Swift suggested that it was time to pay closer attention to the longer-term moving averages and he pointed out that: 

“When these two moving averages cross it causes a significant directional market move…as seen here the last two times they crossed…and they are about to cross again!”

BTC USD daily chart. Source: TradingView

Currently, on the daily time frame, the 111-day moving average and the 128-day moving average are on the verge of crossing. Also, shown by the chart below, Swift points out that moving average crosses between the 128-day moving average and the 111-day moving average led to significant trend reversals during the 2018 bear market. 

BTC USD daily chart. Source: Philip Swift

BTC USD daily chart. Source: TradingView

As the week progressed, buy and sell volume has slowly tapered off and the Bollinger Bands have tightened as price constricts to a narrowing range. These are all indicators that the price is on the verge of making a move. 

Throughout 2019 high volume spikes tended to occur on weekends near the weekly close so here we find ourselves in yet another familiar trading predicament. Some traders have pointed to the bullish divergence currently seen on the daily moving average convergence divergence (MACD) as a sign of positive price action for Bitcoin but the MACD is also on the verge of dropping below the signal line. 

Traders who swear by the MACD should keep an eye on this impending convergence, along with the MACD histogram to see if it drops below zero and flashes pink.   

Over the past two weeks Bitcoin has frequently revisited the zone around the double bottom and while this shows that there is buying interest at this price, failure to rise above $8,000 to $8,500 also shows that sellers wait overhead. The near-equal buy and sell volume on the VPVR also supports this interpretation. 

Looking forward

Lately, not much has changed with Bitcoin’s market structure and the price seems to be ranging. Lower lows have yet to be set but if the price below the support areas (dotted lines) on the daily chart the situation could rapidly change. 

As mentioned earlier, Bitcoin bulls need to push the price to $8,450 and then knock out last week’s high at $8,835 to flip the short-term trend bullish. Until then, it seems likely that traders will be taking up positions in the larger cap altcoins. 

The views and opinions expressed here are solely those of (@horushughes) and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.