Bitcoin in downtrend dips below $9,500

For the near term the outlook for bitcoin (BTC) is bearish as it has traded below $9,500 today. However it should be remembered that five months ago it was trading at $4,000.

Godbole’s analysis

Omkar Godbole has an analysis of bitcoin’s price movements yesterday on CoinDesk. It was last updated at 11:18 UTC. Godbole claims that the bullish mood on the bitcoin market is its weakest in five months as seen by a key technical indicator.

The Chalkin Money Flow (CMF) study which incorporates both prices and trading volumes in order to detect trend changes and strength is currently at 0.02 on the three-day chart.

A positive CMF indicates a bullish bias. However, the latest reading is the lowest since February 20 indicating the market is least bullish on BTC in five months.

As of the article being posted, BTC was changing hands at $9,800 on Bitstamp still well above the 200-day moving average of just $6,270 so in the long term the bias is still in favor of the bulls. However, the CMF has retreated from a 21-month high of 0.40 to its present much lower value makes the short term look bearish and this is also signaled by a pattern of lower highs as BTC has retreated from a high of $13,880 to $9,049.

Chart analysis

The daily chart shows that BTC was unable to breach the trendline hurdle near $10,200 yesterday and ended up closing below $9,900/ This left a candle with a long upper shadow a bearish sign. BTC’s inability to take out the trendline hurdle confirmed bearish view indicated by the descending 5 and 10-day Moving Averages (MA) and the bearish crossover of the the 5-,50 and 10-, 50 day moving averages.

The relative strength index (RSI) also reports bearish conditions as it is below 50. The stage looks to be set for a drop as far as the July 17 low of $9,049.

However, for the bears to continue they have to break the pattern of BTC attempting a recovery. Over the last three weeks, when the price of bitcoin dipped below $9,600 it has been short-lived.

That said, the bears need progress soon, as BTC is again attempting a recovery, having clocked a low of $9,650 earlier today. Over the last three weeks, dips below $9,600 have been consistently short-lived (above right). Buyers could step in lifting prices to the 50-day moving average that is currently at $10,304. For prices to turn bullish they need to rise about $11,120 to invalidate the bearish lower highs pattern.

Present situation

BTC opened at $10,177 24 hours ago and that was its high so far today as well according to CoinDesk data. It has been as low as $9,306 well below $9,600 but still well above the low of $9,049. At 20:00 Central Daylight Time BTC recovered slightly from its low but is still just $9,411. This is down over 7 percent on the day or $766. All top twenty altcoins are also down many in the same range as bitcoin. The present price of bitcoin and the twenty major altcoins can be found here.

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