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Friday market report

Friday market report

Analysis

TL;DR the wait continues and it’s not looking any better.

 

The bitcoin market has displayed little new activity over recent days. Wednesday saw a lift from the high $3,800s back above $4,000, but it has not met with the further gains needed to cement a proper rally. Overnight bitcoin posted a high of $4,050 – once again a lower low.

There is a clear resistance band in the area from $4,050 to $4,200, and as we can see, traders sold as soon as bitcoin approached this band. Moving out to the daily chart, we can see that the market has rejected this resistance zone no fewer than five times already this year, and this may be the sixth. Each time, the price comes down a little more (with the exception of the fakeout back in February).

 

Volatility has now been very low for an extended period of time – longer even than the calm we saw in the autumn before bitcoin crashed below $6,000. It’s fair to expect that this consolidation will result in a big move, whether to the upside or the downside. When it does come, it will give the market a strong steer as to which direction to take next. If it goes up, breaking the resistance band at $4,200, we can expect much higher moves. Ultimately the target of that rally could be as high as $6,000, where traders will meet extremely heavy resistance. To the downside, we have all our old support levels, including the 200 WMA – which is now around $3,450. On that weekly chart, the picture is very clear: price has been rising slowly, with downward-sloping volume. Traders are buying less and less BTC at (slightly) higher and higher prices each week. Unless something significant changes, then sooner or later that process will reach its logical conclusion and the number of buyers will reach equilibrium with sellers – and then it’s downwards.

 

On Sunday the week, month and quarter end on the same day. That will be a significant day for bitcoin, because all of those candles matter for traders looking to take longer-term positions. Price at the close on Sunday will be an important factor to pay attention to.

 

It’s not all bad, of course. It’s worth noting that many alts have posted very strong gains recently. Over just the last week, BAT has painted a major green candle and is now flirting with its all-time high in BTC terms.

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