The pullback that began after Bitcoin reached its 2019 high at the end of last week has accelerated. Since that time, when BTC traded just north of $9,000 briefly, it has fallen 13 percent and appears to be still falling.
Bitcoin Poised to Fall Further
A number of shorter term technical indicators have started to turn red as the weekly trend changes course. Bitcoin still remains above a number of moving averages on the day charts but on hourly ones things are starting to look different. A death cross between the 50 and 200 moving averages occurred on the hourly chart when Bitcoin dumped hard yesterday. This is a very short term indicator but lower highs and lower lows since then also correlate with a downtrend.
An immediate bounce off $7,000 could spell further gains, but the opposite could result in that 30 percent correction analysts have been talking about. From its recent high, a correction of this magnitude could drop BTC down to $6,400 which, coincidentally, was 2018’s most traded price.
There is stronger support further down with some traders looking at a fall back to $5,500;
Bloomberg recently reported that their GTI Vera Convergence-Divergence indicator, which measures positive and negative trends, has flashed ‘sell’ for the first time since April. It added that the Bloomberg Galaxy Crypto Index dropped around 10% as the entire crypto market retreated in the wake of Bitcoin’s movements.
First Correction of 2019
The move has initiated the first real correction of the year as Bitcoin has been on the up since February. It is the largest selloff since the massive plunge in mid-November which sent BTC sliding from $6,300 to $4,000 in just a week. This was a 36 percent fall, though not necessarily a correction as it was during a bear market.
Looking at the yearly charts it is clear to see that massive support sits around $6,400 and $5,300 where things remained flat for several weeks. It is also clear to see that markets are definitely off the bottom. Therefore a correction to these levels will still maintain the uptrend that began in early April when BTC smashed through resistance at $4,200.
Corrections are not a bad thing; they are a natural part of market cycles and price action is not linear. Following the epic two month run for Bitcoin and crypto this year, there will be no shortage of retail traders and investors waiting to get in at lower prices … and this is all before the big institutions arrive at the scene.