Bitcoin appears to have returned to its most recent trading range of $6,350 – $7,000 after correcting nearly 10% yesterday. There was a quick pop to $7,500 but BTC was unable to hold this price and quickly descended back below $7000 by days end.
In general, BTC continues to trend lower while trading within a predictable range of $6300 – $7000. The 100-day moving average (MA) is still below the 200-day MA and the 20-day MA is still crossed below the 50-day MA.
4 Hour Chart
Technical analysis indicates persistent market uncertainty and stock market and cryptocurrency current events have the potential of giving bears the upper hand. The RSI, Stoch and MACD on yesterday’s 4 hour and daily chart indicated potential bullishness pre and post BTC movement to $7500, yet BTC quickly descended back under $7,000. Therefore, traders should take caution and limit the length of trades to 12 – 24 hours as BTC is likely to struggle gaining above $7000 today.
At the time of writing BTC has recovered to $6,800, with the RSI at 40, Stoch flatlined indicating oversold conditions and the MACD descending with the possibility of flattening out as the day proceeds. Current analysis suggest continued limited recovery in BTC price but BTC needs to close above $7,000 to avoid a retest of the April ($6,450) and February ($5,850 ) lows. Overall, a quick glance at the daily chart and moving averages for the 20, 50 and 100 indicate further decline as the path of least resistance.
While BTC may bounce to $7200 – $7500 it is likely that these rallies will be short lived as previously broken support levels will now serve as levels of resistance. Keeping this in mind, aggressive traders and swing traders should limit the duration of each trade as advised above and longs should abstain from initiating new positions as more attractive entry points may arise if BTC fails to sustain prices above $7,000.
On a more positive note, the formation of a double bottom pattern appears to be in the making and if BTC can break above the descending channel a bullish reversal could be in order, leading prices back towards $8,000.
Market & External Factors Impacting Bitcoin price
Technical analysis aside, there are other pressing factors weighing negatively on BTC price.
- Regulatory fears continue to affect BTC price.
- Fears of a trade war between the United States and China have taken a heavy toll on stock markets and appear to be impacting crypto markets, further supporting the belief that stock and cryptocurrency market performance are linked.
- Taxes! Americans and Brits are preparing to file their taxes during April which could partially explain the lack of buying as some cash out to cover capital gains tax while others in the US might be navigating what is proving to be a rather tricky filing situation.
- Volume has still been slow, meaning small and institutional investors may be waiting for validation of a bull market return.
- BTC will continue to trade within the range of $6,300 – $7,300 and needs to close at or above $7,000.
- It is still unclear whether BTC has found a bottom but buyers and volume have returned each time BTC dropped to $6,300.
- A BTC close below $7,000 could intensify selling and further degrade price.