Bitcoin has just broken down from a descending channel that was five weeks in the making. Is a fast descent to $75K and then $70K about to take place, or could this be a fakeout, with the $BTC price already potentially basing on support at $78K?
$BTC price settles at $77,800 - a bottom already found?
Source: TradingView
On the face of it things do not look good for the $BTC price. More than five weeks inside a descending channel that would more often than not break to the upside, a break to the downside has occurred instead. This was a very sharp break with $5,500 knocked off of the price in the space of several hours. The $BTC price descended to $76,350 before the bulls stepped in and bought the price back up to over $78K. Currently the price has settled at a decent support level of $77,800.
So is this the beginning of the long-awaited collapse down to $70K and perhaps even lower? If things really start to fall apart in the stock market then yes, Bitcoin would be very unlikely to escape that kind of market panic. The three big companies reporting earnings this week were Microsoft, Google, and Amazon. Although all three were generally up, misses in certain areas and heavy capex spending has made the market nervous.
Nevertheless, it may well be that the $BTC price has found a bottom and that it could return inside the descending channel by the end of the week.
S&P Futures sell-off, but support may have been found
Source: TradingView
The S&P 500 E-mini Futures chart shows a big sell off overnight, much like what happened to the $BTC price. We can also see that the Futures came down to strong support, in this case at the junction of two ascending trendlines. If this support holds, this will mean a higher low, which matches the recent higher high - a change in trend?
While the Futures were down more than 1% earlier on Friday, given the support, could it be that a bounce will occur in the stock market when it opens later today, thereby easing the pressure on Bitcoin and allowing it to also bounce?
Losing support on the daily?
Source: TradingView
In the daily chart we can see that the $BTC price is already trying to break down below the $77,850 horizontal support level. If it does manage to achieve this, $75,600 is the next level below. It can also be seen that the 100-day SMA (green line) provided support at the bottom of the candle tail, just as the 50-day SMA (blue line) is now strong resistance at $82K.
A test of the 50-week bull market support?
Source: TradingView
In the weekly chart another big support level emerges. $77K could be the horizontal support level that the $BTC price may just be beginning to bounce from. We could also certainly throw the 50-week SMA into the mix. We have already ascertained that this moving average is what supported the entire previous bull market. It would probably make sense that the $BTC price tests the 50-week here before continuing on into the current bull market.
For the immediate future, the S&P 500 E-mini Futures is back at trendline support. If it doesn’t hold, the $BTC price could get to physically test that 50-week SMA. The bulls will be praying that it holds.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Source: Crypto Daily