Published
5 years ago on
November 30, 2018
Bitcoin (BTC) is down again on its last trading day for the month. The monthly RSI for BTC/USD has now reached a historical support and is unlikely to break below it. The price of Bitcoin (BTC) is currently below the $4,150 level but it is expected to close the monthly candle above it. Bitcoin (BTC) has completed its retracement in the first half of the day and is now in a position to push in order to close the monthly candle during the second half. The monthly chart for BTC/USD shows that during the last bear market, Bitcoin (BTC) did the same. When the RSI reached current levels on the monthly chart, the price shot back up and closed the monthly candle above key structure levels.
The same is expecting this time as anything out of the ordinary is not likely to happen unless it is in tandem with the stock market. The effect of the stock market on the price movements of Bitcoin (BTC) is often overlooked but as we have pointed out in our previous analyses, there are some very strong correlations. Bitcoin (BTC) has danced to the tune of major stock market indices for the past few months. It has traded independently at times, mostly on weekends, but that activity for the most part has been inconsequential. The way Bitcoin (BTC) closes its monthly candle today is going to determine the course of action for the months ahead. When Bitcoin (BTC) dropped below the 21 Month EMA, it set the ground for an extended correction.
However, instead of gradually proceeding to the capitulation period which took three monthly candles below the 21 Month EMA last time, it has been done with only one candle this time. This had led to some doubts and suspicions as to the finality of this capitulation. Some analysts believe that we are not yet in the capitulation phase and that candle for the month of November is the same as the first candle formed when BTC/USD broke below the 21 Month EMA in 2014. This theory is rather hard to believe considering the drop has not just been a retracement but more of a crash and can be aptly termed as capitulation. Even if we accept for the sake of argument that this is not the actual capitulation and is in fact the first drop below the 21 Month EMA as in 2014, then even in that case we will have to see a retest of the 21 Month EMA before the price can fall again.
The short term trend is quite clear as shown by the daily chart for BTC/USD. The RSI has run into a strong resistance which was the previous support. It is clear that Bitcoin (BTC) is not going anywhere short term unless the RSI breaks past this resistance. It is likely that this is a setup to lure in the bears for a final shakeout before the price rallies from current levels. In our previous analyses we explained how the reversal might not have begun yet because that would have been too easy. The price never reverses without some struggle. It is the sort of struggle where both sides fight and one of them has to get hurt such that they are completely demoralized and compelled to give up. Only then the price can begin to take a conclusive direction.
Investment Disclaimer
