Over the past few hours, Bitcoin has at last seen some volatility play out after a multi-week lull by plunging below $7,500 after holding in the low as $8,000s for days on end.
According to previous reports from NewsBTC, this move largely caught traders off guard, with there being a massive long liquidation event of over $200 million on BitMEX amidst this crash.
While the selling pressure has now paused, there are still some technical signals that imply bearish continuation over the coming days.
Yesterday, analyst Philip Swift noted that in the previous market cycle, Bitcoin followed a pattern of bottoming at the 200-week moving average, then seeing its first bull market rally to bottom at 100-week moving average.
Bitcoin seems to be doing the same this time around. But if the 100-week moving average is lost, a potential macro bear market or at least months more of consolidation could follow suit.
BTC/USD was trading 2.61% lower on the day at 9194.76 at 07:55 GMT, bias neutral.
The pair remains trapped between 2 major moving averages, 9616 (100-DMA) and 9006 (200-DMA).
A major trend in the pair is bearish. Minor uptrend seems to have fizzled out. Technical studies are showing signs of retracement.
Stochs and RSI have turned and Stochastics RSI is on verge of bearish rollover from overbought levels.
Retrace below 200-DMA will see downside resumption. The next support lies at 20-DMA at 8404.
On the flipside, break above 100-DMA will see a test of channel top at 9915. Channel breakout required for bullish continuation.
Note that the relative strength index (RSI) was reporting oversold conditions when the crossover happened.
A market is often oversold by the time a cross is confirmed, as the MAs are based on past data and the crossovers are a product of price rallies or sell-offs.
In mid-September, 2015, bitcoin’s pullback from highs near $250 also ran out of steam near $220 with the confirmation of a death cross.
The impending crossover may also turn out to be a bear trap, as bitcoin will most likely be oversold by then, having dropped more than 40 percent already from June’s high of $13,800.